As filed with the Securities and Exchange Commission on April 15, 1998
1933 Act File No. 33-19589; 1940 Act File No. 811-5447
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SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 X
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Pre-Effective Amendment No.____ -----
Post-Effective Amendment No._21_ X
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and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 X
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Amendment No._23_
(check appropriate box or boxes)
AMERICAN CENTURY QUANTITATIVE EQUITY FUNDS
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(Exact Name of Registrant as Specified in Charter)
American Century Tower, 4500 Main Street, Kansas City, MO 64111
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(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, including Area Code: (816) 531-5575
Douglas A. Paul
1665 Charleston Road, Mountain View, CA 94043
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(Name and Address of Agent for Service)
Approximate Date of Proposed Public Offering: June 30, 1998
It is proposed that this filing become effective: (check appropriate box)
_____ immediately upon filing pursuant to paragraph (b) of Rule 485
_____ on (date) pursuant to paragraph (b) of Rule 485
_____ 60 days after filing pursuant to paragraph (a) of Rule 485
_____ on June 30, 1998 pursuant to paragraph (a)(1) of Rule 485
__X__ 75 days after filing pursuant to paragraph (a) (2) of Rule 485
_____ on (date) pursuant to paragraph (a)(2) of Rule 485
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The Registrant has registered an indefinite number or amount of Securities
under the Securities Act of 1933 pursuant to Rule 24f-2. The Rule 24f-2 notice
for the fiscal year ending December 31, 1997, was filed on February 24, 1998.
<PAGE>
CROSS-REFERENCE SHEET
PART A: PROSPECTUS
ITEM PROSPECTUS CAPTION
1 Cover Page
2 Transaction and Operating Expense Table
3 Not Applicable
4 Investment Policies of the Funds, Risk Factors and Investment
Techniques, Other Investment Practices, Their Characteristics and
Risks; Performance Advertising; Distribution of Fund Shares; Further
Information About American Century
5 Management
6 Further Information About American Century
7 How to Open an Account, How to Exchange from One Account to Another,
Share Price, Distributions
8 How to Redeem Shares, Signature Guarantee
9 Not Applicable
PART B: STATEMENT OF ADDITIONAL INFORMATION
ITEM STATEMENT OF ADDITIONAL INFORMATION CAPTION
10 Cover Page
11 Table of Contents
12 Not Applicable
13 Investment Policies and Techniques, Investment Restrictions, Portfolio
Turnover
14 Directors and Officers, Management, Custodians
15 Capital Stock
16 Management, Custodians
17 Brokerage; Performance Advertising
18 Capital Stock, Multiple Class Structure
19 Not Applicable
20 Not Applicable
21 Not Applicable
22 Performance Advertising
23 Financial Statements
<PAGE>
PROSPECTUS
June 30, 1998
American
Century
Group
Small Cap Quantitative
INVESTOR CLASS
AMERICAN CENTURY INVESTMENTS
FAMILY OF FUNDS
American Century Investments offers you nearly 70 fund choices covering stocks,
bonds, money markets, specialty investments and blended portfolios. To help you
find funds that may meet your investment needs, American Century funds have been
divided into three groups based on investment style and objectives. These
groups, which appear below, are designed to help simplify your fund decisions.
AMERICAN CENTURY INVESTMENTS
BENHAM GROUP AMERICAN CENTURY GROUP TWENTIETH CENTURY GROUP
MONEY MARKET FUNDS ASSET ALLOCATION &
GOVERNMENT BOND FUNDS BALANCED FUNDS
DIVERSIFIED BOND FUNDS CONSERVATIVE EQUITY FUNDS GROWTH FUNDS
MUNICIPAL BOND FUNDS SPECIALTY FUNDS INTERNATIONAL FUNDS
Small Cap Quantitative
PROSPECTUS
June 30, 1998
Small Cap Quantitative
INVESTOR CLASS
American Century Quantitative Equity Funds
American Century Quantitative Equity Funds is a part of American Century
Investments, a family of funds that includes nearly 70 no-load mutual funds
covering a variety of investment opportunities. One of the funds from our
American Century Group of funds is described in this Prospectus. Its investment
objective is listed on page 2 of this Prospectus. The other funds are described
in separate prospectuses.
Through its Investor Class of shares, American Century offers investors a full
line of no-load funds, investments that have no sales charges or commissions.
This Prospectus gives you information about the fund that you should know before
investing. Please read this Prospectus carefully and retain it for future
reference. Additional information is included in the Statement of Additional
Information dated June 30, 1998, and filed with the Securities and Exchange
Commission. It is incorporated into this Prospectus by reference. To obtain a
copy without charge, call or write:
American Century Investments
4500 Main Street o P.O. Box 419200
Kansas City, Missouri 64141-6200o 1-800-345-2021
International calls: 816-531-5575
Telecommunications Device for the Deaf:
1-800-634-4113 o In Missouri: 816-444-3485
www.americancentury.com
Additional information, including this Prospectus and the Statement of
Additional Information, may be obtained by accessing the Web site maintained by
the SEC (www.sec.gov).
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
INVESTMENT OBJECTIVE OF THE FUND
AMERICAN CENTURY SMALL CAP QUANTITATIVE FUND
Small Cap Quantitative seeks long-term capital appreciation by investing
primarily in equity securities of small companies.
There is no assurance that the fund will achieve its investment objective.
NO PERSON IS AUTHORIZED BY THE FUND TO GIVE ANY INFORMATION OR MAKE ANY
REPRESENTATION OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS OR IN OTHER PRINTED
OR WRITTEN MATERIAL ISSUED BY OR ON BEHALF OF THE FUND, AND YOU SHOULD NOT RELY
ON ANY OTHER INFORMATION OR REPRESENTATION.
TABLE OF CONTENTS
Investment Objectives of the Fund
Transaction and Operating Expense Table
Financial Highlights
INFORMATION REGARDING THE FUND
Investment Policies of the Fund
Risk Factors and Investment Techniques
Portfolio Optimization
Other Investment Practices, Their Characteristics
and Risks
Portfolio Turnover
Convertible Securities
Futures Contracts
and Options Thereon
Short-Term Instruments
Foreign Securities
Securities Lending
Other Techniques
Performance Advertising
HOW TO INVEST WITH AMERICAN CENTURY INVESTMENTS
American Century Investments
Investing in American Century How to Open an Account
By Mail
By Wire
By Exchange
In Person
Subsequent Investments
By Mail
By Telephone
By Online Access
By Wire
In Person
Automatic Investment Plan
How to Exchange from One Account to Another
By Mail
By Telephone
By Online Access
How to Redeem Shares
By Mail
By Telephone
By Check-A-Month
Other Automatic Redemptions
Redemption Proceeds
By Check
By Wire and ACH
Redemption of Shares in Low-Balance Accounts
Signature Guarantee
Special Shareholder Services
Automated Information Line
Online Account Access
Open Order Service
Tax-Qualified Retirement Plans
Important Policies Regarding Your Investments
Reports to Shareholders
Employer-Sponsored Retirement Plans and
Institutional Accounts
ADDITIONAL INFORMATION YOU SHOULD KNOW
Share Price
When Share Price Is Determined
How Share Price Is Determined
Where to Find Information About Share Price
Distributions
Taxes
Tax-Deferred Accounts
Taxable Accounts
Management
Investment Management
Code of Ethics
Transfer and Administrative Services
Distribution of Fund Shares
Further Information About American Century
TRANSACTION AND OPERATING EXPENSE TABLE
Small Cap
Quantitative
SHAREHOLDER TRANSACTION EXPENSES:
Maximum Sales Load Imposed on Purchases ........................... none
Maximum Sales Load Imposed on Reinvested Dividends ................ none
Deferred Sales Load ............................................... none
Redemption Fee(1) ................................................. none
Exchange Fee ...................................................... none
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ANNUAL FUND OPERATING EXPENSES:
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(as a percentage of net assets)
Management Fees(2) ................................................ 0.90%
12b-1 Fees ........................................................ none
Other Expenses .................................................... 0.01%
Total Fund Operating Expenses ..................................... 0.91%
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EXAMPLE
You would pay the following expenses on a 1 year $ 9
$1,000 investment, assuming a 5% annual return and 3 years 29
redemption at the end of each time period: 5 years 50
10 years 112
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(1) Redemption proceeds sent by wire are subject to a $10 processing fee.
(2) A portion of the management fee may be paid by American Century Investment
Management, Inc. (the manager) to unaffiliated third parties who provide
recordkeeping and administrative services that would otherwise be performed
by an affiliate of the manager. See "Management - Transfer and
Administrative Services," page 21.
The purpose of this table is to help you understand the various costs and
expenses that you, as a shareholder, will bear directly or indirectly in
connection with an investment in the class of shares of the fund offered by this
Prospectus. The example set forth above assumes reinvestment of all dividends
and distributions and uses a 5% annual rate of return as required by SEC
regulations.
Neither the 5% rate of return nor the expenses shown above should be considered
indications of past or future returns and expenses. Actual returns and expenses
may be greater or less than those shown.
The shares offered by this Prospectus are Investor Class shares and have no
up-front or deferred sales charges, commissions, or 12b-1 fees. The fund offers
two other classes of shares, primarily to institutional investors, that has
different fee structures than the Investor Class. The difference in the fee
structures among the classes is the result of their separate arrangements for
shareholder and distribution services and not the result of any difference in
amounts charged by the manager for core investment advisory services.
Accordingly, the core investment advisory expenses do not vary by class. A
difference in fees will result in different performance for the other classes.
For additional information about the various classes, see "Further Information
About American Century," page xx.
INFORMATION REGARDING THE FUND
INVESTMENT POLICIES OF THE FUND
The fund has adopted certain investment restrictions that are set forth in the
Statement of Additional Information. Those restrictions, as well as the
investment objective of the fund identified on page 2 of this Prospectus, and
any other investment policies designated as "fundamental" in this Prospectus or
in the Statement of Additional Information, cannot be changed without
shareholder approval. The fund has implemented additional investment policies
and practices to guide its activities in the pursuit of its investment
objective. These policies and practices, which are described throughout this
Prospectus, are not designated as fundamental policies and may be changed
without shareholder approval.
Small Cap Quantitative's investment objective is to seek long-term capital
appreciation by investing primarily in equity securities of small companies.
Small Cap Quantitative is designed for investors whose financial goals include
long-term capital growth.
The fund will invest primarily in common stocks of smaller companies, as
determined by market capitalization. A company shall be considered to have a
smaller market capitalization if, at the time of investment, it has a market
capitalization which is not greater than the market capitalization of the
largest company contained in the S&P Small Cap 600 Index. The S&P Small Cap 600
Index is a stock index that tracks the performance of equity securities of
smaller capitalization companies. As of December 31, 1997, the largest company
contained in the S&P Small-Cap 600 Index had a market capitalization of
approximately $2.7 billion, while the median company contained in the index had
a market capitalization of approximately $499 million.
The manager seeks a total return for Small Cap Quantitative that exceeds the
total return of the S&P 600. Of course, Small Cap Quantitative's total return
may be higher or lower than the S&P 600's return over any period of time.
RISK FACTORS AND INVESTMENT TECHNIQUES
The manager uses quantitative management strategies in pursuit of the fund's
investment objective. Quantitative management combines two investment management
approaches. The first is to rank stocks based on their relative attractiveness.
The attractiveness of a stock is determined analytically by using a computer
model to combine valuation and growth measures. Examples of valuation measures
include price to book and price to cash flow ratios while examples of growth
measures include the rate of growth of a company's earnings and changes in
analysts' earnings estimates.
The second approach is to use a technique referred to as portfolio optimization.
Using a computer the manager constructs a portfolio (i.e. company names and
shares held in each) that seeks the optimal tradeoff between the risk of the
portfolio relative to a benchmark (i.e. the S&P 600) and the expected return of
the portfolio as measured by the stock ranking model.
Approximately 65% of the fund's portfolio holdings will be drawn from equity
securities of companies with a market capitalization within the range of those
which make up the S&P 600. In 1997, that capitalization range was $35 million to
$2.7 billion.
A fund's investment approach may cause it to be more heavily invested in some
industries than in others. However, the fund may not invest more than 25% of its
total assets in companies whose principal business activities are in the same
industry. In addition, the fund is a "diversified" investment company as defined
in the Investment Company Act of 1940 (the Investment Company Act). This means
that investments in any single issuer are limited by restrictions in the
Investment Company Act.
The fund may invest in securities or engage in transactions involving
instruments other than equity securities, as discussed in the section titled
"Other Investment Practices, Their Characteristics and Risks," page x.
OTHER INVESTMENT PRACTICES, THEIR
CHARACTERISTICS AND RISKS
For additional information, see "Additional Investment Restrictions" in the
Statement of Additional Information.
PORTFOLIO TURNOVER
Investment decisions to purchase and sell securities are based on the
anticipated contribution of the security in question to the fund's objective.
The manager considers the rate of portfolio turnover when it determines a change
is in order to achieve the objective and, accordingly under normal conditions
the annual portfolio turnover rate is not anticipated to exceed 150%.
The portfolio turnover of the fund may be higher than other mutual funds with
similar investment objectives. Higher turnover would generate correspondingly
greater brokerage commissions that the fund pays directly. Higher portfolio
turnover also may increase the likelihood that the capital gains, if any,
realized and distributed by the fund will include short-term capital gains,
which are taxable as ordinary income. When a security is sold, the manager seeks
whenever possible to minimize the capital gain that would be realized.
CONVERTIBLE SECURITIES
Although the fund's equity investments consist primarily of common stock, the
fund may buy securities convertible into common stock, such as convertible
bonds, convertible preferred stocks, and warrants. The manager may purchase
these securities if it believes that a company's convertible securities are
undervalued in the market.
FUTURES CONTRACTS AND OPTIONS THEREON
The fund may buy or sell futures contracts relating to groups of securities or
indices and write or buy put and call options relating to such futures
contracts.
For options sold, the fund will segregate cash or appropriate liquid assets
including equity securities and debt securities of any grade equal to the value
of securities underlying the option unless the option is otherwise covered.
The fund will deposit cash or appropriate liquid assets in a segregated
custodial account in an amount equal to the fluctuating market value of long
futures contracts it has purchased, less any margin deposited on its long
position. It may hold cash or acquire such debt obligations for the purpose of
making these deposits.
The fund may use futures and options transactions to maintain cash reserves
while remaining fully invested, to facilitate trading, to reduce transaction
costs, or to pursue higher investment returns when a futures contract is priced
more attractively than its underlying security or index.
Futures contracts and options thereon may subject the fund to greater and more
volatile risks than might otherwise be the case. The principal risks related to
the use of such instruments are (1) the offsetting correlation between movements
in the market price of the portfolio investments (held or intended) being hedged
and in the price of the futures contract or option may be imperfect; (2)
possible lack of a liquid secondary market for closing out futures or option
positions; (3) the need of additional portfolio management skills and
techniques; and (4) losses due to unanticipated market price movements. For a
hedge to be completely effective, the price change of the hedging instrument
should equal the price change of the securities being hedged. Such equal price
changes are not always possible because the investment underlying the hedging
instrument may not be the same investment that is being hedged.
The ordinary spreads between prices in the cash and futures markets, due to the
differences in the nature of those markets, are subject to distortion. Due to
the possibility of distortion, a correct forecast of general interest rate
trends by the manager may still not result in a successful transaction. The
manager may be incorrect in its expectations as to the extent of various
interest rate movements or the time span within which the movements take place.
See the Statement of Additional Information for further information about these
instruments and their risks.
SHORT-TERM INSTRUMENTS
For liquidity purposes, the fund may invest in high-quality money market
instruments with remaining maturities of one year or less.
The fund also may enter into repurchase agreements, collateralized by U.S.
government securities, with banks or broker-dealers that are deemed to present
minimal credit risk. Credit risk determinations are made by the manager pursuant
to guidelines established by the Board of Directors. A repurchase agreement
involves the purchase of a security and a simultaneous agreement to sell the
security back to the seller at a higher price. Delays or losses could result if
the party to the agreement defaults or becomes bankrupt.
The fund may invest up to 5% of its total assets in any money market fund
advised by the manager, provided that the investment is consistent with the
fund's investment policies and restrictions.
FOREIGN SECURITIES
The fund may invest in securities of foreign issuers, including instruments that
trade on domestic or foreign securities exchanges in U.S. dollars or foreign
currencies. Securities of foreign issuers may be affected by the strength of
foreign currencies relative to the U.S. dollar or by political or economic
developments in foreign countries. Foreign companies may not be subject to
accounting standards or governmental regulations comparable to those that affect
U.S. companies, and there may be less public information about their operations.
OTHER TECHNIQUES
The manager may buy other types of securities or employ other portfolio
management techniques on behalf of a fund including reverse repurchase
agreements. When SEC guidelines require it to do so, the fund will set aside
cash or appropriate liquid assets in a segregated account to cover the fund's
obligations.
PERFORMANCE ADVERTISING
From time to time, the fund may advertise performance data. Fund performance may
be shown by presenting one or more performance measurements, including
cumulative total return or average annual total return and yield. Performance
data may be quoted separately for the Investor Class and for the other classes.
Cumulative total return data is computed by considering all elements of return,
including reinvestment of dividends and capital gains distributions, over a
stated period of time. Average annual total return is determined by computing
the annual compound return over a stated period of time that would have produced
the fund's cumulative total return over the same period if the fund's
performance had remained constant throughout.
A quotation of yield reflects a fund's income over a stated period of time
expressed as a percentage of the fund's share price. The effective yield is
calculated in a similar manner, but when annualized, the income earned by the
investment is assumed to be reinvested. The effective yield will be slightly
higher than the yield because of the compounding effect on the assumed
reinvestment.
Yield is calculated by adding over a 30-day (or one-month) period all interest
and dividend income (net of fund expenses) calculated on each day's market
values, dividing this sum by the average number of fund shares outstanding
during the period, and expressing the result as a percentage of the fund's share
price on the last day of the 30-day (or one-month) period. The percentage is
then annualized. Capital gains and losses are not included in the calculation.
Yields are calculated according to accounting methods that are standardized in
accordance with SEC rules for all stock and bond funds. Because yield accounting
methods differ from the methods used for other accounting purposes, a fund's
yield may not equal the income paid on its shares or the income reported in the
fund's financial statements.
The fund also may include in advertisements data comparing performance with the
performance of non-related investment media, published editorial comments and
performance rankings compiled by independent organizations (such as Lipper
Analytical Services, Inc.) and publications that monitor the performance of
mutual funds. Performance information may be quoted numerically or may be
presented in a table, graph or other illustration. In addition, fund performance
may be compared to well-known indices of market performance. Fund performance
also may be compared, on a relative basis, to other funds in our fund family.
This relative comparison, which may be based upon historical fund performance or
historical or expected volatility or other fund characteristics, may be
presented numerically, graphically or in text. Fund performance also may be
combined or blended with other funds in our fund family, and that combined or
blended performance may be compared to the same indices to which individual
funds may be compared.
All performance information advertised by the fund is historical in nature and
is not intended to represent or guarantee future results. The value of fund
shares when redeemed may be more or less than their original cost.
HOW TO INVEST WITH AMERICAN CENTURY INVESTMENTS
AMERICAN CENTURY INVESTMENTS
Small Cap Quantitative is a part of the American Century Investments family of
mutual funds. Our family provides a full range of investment opportunities, from
the aggressive equity growth funds in our Twentieth Century Group, to the fixed
income funds in our Benham Group, to the moderate risk and specialty funds in
our American Century Group. Please call 1-800-345-2021 for a brochure or
prospectuses for the other funds in the American Century Investments family.
To reduce expenses and demonstrate respect for our environment, we have
initiated a project through which we will eliminate duplicate copies of most
financial reports and prospectuses to most households and deliver account
statements to most households in a single envelope, even if they have more than
one account. If you would like additional copies of financial reports and
prospectuses or separate mailing of account statements, please call us.
INVESTING IN AMERICAN CENTURY
The following sections explain how to invest in American Century funds,
including purchases, redemptions, exchanges and special services. You will find
more detail about doing business with us by referring to the Investor Services
Guide that you will receive when you open an account.
If you own or are considering purchasing fund shares through an
employer-sponsored retirement plan or through a bank, broker-dealer or other
financial intermediary, the following sections, as well as the information
contained in our Investor Services Guide, may not apply to you. Please read
"Employer-Sponsored Retirement Plans and Institutional Accounts," page xx.
HOW TO OPEN AN ACCOUNT
To open an account, you must complete and sign an application, furnishing your
taxpayer identification number. (You must also certify whether you are subject
to withholding for failing to report income to the IRS.) Investments received
without a certified taxpayer identification number will be returned.
The minimum investment is $2,500 [$1,000 for IRA and Uniform Gifts/Transfers to
Minors Acts (UGMA/UTMA) accounts]. These minimums will be waived if you
establish an automatic investment plan to your account that is the equivalent of
at least $50 per month. See "Automatic Investment Plan," page xx.
The minimum investment requirements may be different for some types of
retirement accounts. Call one of our Investor Services Representatives for
information on our retirement plans, which are available for individual
investors or for those investing through their employers.
Please note: If you register your account as belonging to multiple owners (e.g.,
as joint tenants), you must provide us with specific authorization on your
application in order for us to accept written or telephone instructions from a
single owner. Otherwise, all owners will have to agree to any transactions that
involve the account (whether the transaction request is in writing or over the
telephone).
You may invest in the following ways:
By Mail
Send a completed application and check or money order payable in U.S. dollars to
American Century Investments.
By Wire
You may make your initial investment by wiring funds. To do so, call us or mail
a completed application and provide your bank with the following information:
o Receiving bank and routing number:
Commerce Bank, N.A. (101000019)
o Beneficiary (BNF):
American Century Services Corporation
4500 Main St., Kansas City, Missouri 64111
o Beneficiary account number (BNF ACCT):
2804918
o Reference for Beneficiary (RFB):
American Century account number into which you are investing. If more
than one, leave blank and see Bank to Bank Information below.
o Originator to Beneficiary (OBI):
Name and address of owner of account into which you are investing.
o Bank to Bank Information
(BBI or Free Form Text):
o Taxpayer identification or Social Security number.
o If more than one account, account numbers and amount to be invested in
each account.
o Current tax year, previous tax year or rollover designation if an IRA.
Specify whether traditional IRA, Roth IRA, Education IRA, SEP-IRA,
SARSEP-IRA, SIMPLE Employer or SIMPLE Employee.
By Exchange
Call 1-800-345-2021 from 7 a.m. to 7 p.m. Central time to get information on
opening an account by exchanging from another American Century account. See this
page for more information on exchanges.
In Person
If you prefer to work with a representative in person, please visit one of our
Investor Centers, located at:
4500 Main Street
Kansas City, Missouri 64111
4917 Town Center Drive
Leawood, Kansas 66211
1665 Charleston Road
Mountain View, California 94043
2000 S. Colorado Blvd.
Denver, Colorado 80222
SUBSEQUENT INVESTMENTS
Subsequent investments may be made by an automatic bank, payroll or government
direct deposit (see "Automatic Investment Plan," this page) or by any of the
methods below. The minimum investment requirement for subsequent investments is
$250 for checks submitted without the investment slip portion of a previous
statement or confirmation and $50 for all other types of subsequent investments.
By Mail
When making subsequent investments, enclose your check with the investment slip
portion of a previous statement or confirmation. If the investment slip is not
available, indicate your name, address and account number on your check or a
separate piece of paper. (Please be aware that the investment minimum for
subsequent investments is higher without an investment slip.)
By Telephone
Once your account is open, you may make investments by telephone if you have
authorized us (by choosing "Full Services" on your application) to draw on your
bank account. You may call an Investor Services Representative or use our
Automated Information Line.
By Online Access
Once your account is open, you may make investments online if you have
authorized us (by choosing "Full Services" on your application) to draw on your
bank account.
By Wire
You may make subsequent investments by wire. Follow the wire transfer
instructions on page xx and indicate your account number.
In Person
You may make subsequent investments in person at one of our Investor Centers.
The locations of our Investor Centers are listed on this page.
AUTOMATIC INVESTMENT PLAN
You may elect on your application to make investments automatically by
authorizing us to draw on your bank account regularly. Such investments must be
at least the equivalent of $50 per month. You also may choose an automatic
payroll or government direct deposit. If you are establishing a new account,
check the appropriate box under "Automatic Investments" on your application to
receive more information. If you would like to add a direct deposit to an
existing account, please call an Investor Services Representative.
HOW TO EXCHANGE FROM ONE ACCOUNT TO ANOTHER
As long as you meet any minimum investment requirements, you may exchange your
fund shares to our other funds up to six times per year per account. An exchange
request will be processed as of the same day it is received, if it is received
before the fund's net asset values are calculated, which is one hour prior to
the close of the New York Stock Exchange for funds issued by American Century
Target Maturities Trust and at the close of the Exchange for all of our other
funds. See "When Share Price is Determined," page 23.
For any single exchange, the shares of each fund being acquired must have a
value of at least $100. However, we will allow investors to set up an Automatic
Exchange Plan between any two funds in the amount of at least $50 per month. See
our Investor Services Guide for further information about exchanges.
By Mail
You may direct us in writing to exchange your shares from one American Century
account to another. For additional information, please see our Investor Services
Guide.
By Telephone
You can make exchanges over the telephone (either with an Investor Services
Representative or using our Automated Information Line--see page 20) if you have
authorized us to accept telephone instructions. You can authorize this by
selecting "Full Services" on your application or by calling us at 1-800-345-2021
to get the appropriate form.
By Online Access
You can make exchanges online if you have authorized us to accept instructions
over the Internet. You can authorize this by selecting "Full Services" on your
application or by calling us at 1-800-345-2021 to get the appropriate form.
HOW TO REDEEM SHARES
We will redeem or "buy back" your shares at any time. Redemptions will be made
at the next net asset value determined after a complete redemption request is
received.
Please note that a request to redeem shares in an IRA or 403(b) plan must be
accompanied by an executed IRS Form W4-P and a reason for withdrawal as
specified by the IRS.
By Mail
Your written instructions to redeem shares may be made either by a redemption
form, which we will send you upon request, or by a letter to us. Certain
redemptions may require a signature guarantee. Please see "Signature Guarantee,"
page xx.
By Telephone
If you have authorized us to accept telephone instructions, you may redeem your
shares by calling an Investor Services Representative.
By Check-A-Month
If you have at least a $10,000 balance in your account, you may redeem shares by
Check-A-Month. A Check-A-Month plan automatically redeems enough shares each
month to provide you with a check in an amount you choose (minimum $50). To set
up a Check-A-Month plan, please call and request our Check-A-Month brochure.
Other Automatic Redemptions
If you have at least a $10,000 balance in your account, you may elect to make
redemptions automatically by authorizing us to send funds to you or to your
account at a bank or other financial institution. To set up automatic
redemptions, call an Investor Services Representative.
REDEMPTION PROCEEDS
Please note that shortly after a purchase of shares is made by check or
electronic draft (also known as an ACH draft) from your bank, we may wait up to
15 days or longer to send redemption proceeds (to allow your purchase funds to
clear). No interest is paid on the redemption proceeds after the redemption is
processed but before your redemption proceeds are sent.
Redemption proceeds may be sent to you in one of the following ways:
By Check
Ordinarily, all redemption checks will be made payable to the registered owner
of the shares and will be mailed only to the address of record. For more
information, please refer to our Investor Services Guide.
By Wire and ACH
You may authorize us to transmit redemption proceeds by wire or ACH. These
services will be effective 15 days after we receive the authorization.
Your bank will usually receive wired funds within 48 hours of transmission.
Funds transferred by ACH may be received up to seven days after transmission.
Wired funds are subject to a $10 fee to cover bank wire charges, which is
deducted from redemption proceeds. Once the funds are transmitted, the time of
receipt and the funds' availability are not under our control.
REDEMPTION OF SHARES IN LOW-BALANCE ACCOUNTS
Whenever the shares held in an account have a value of less than the required
minimum, a letter will be sent advising you to either bring the value of the
shares held in the account up to the minimum or to establish an automatic
investment that is the equivalent of at least $50 per month. See "How to Open An
Account," page 16. If action is not taken within 90 days of the letter's date,
the shares held in the account will be redeemed and the proceeds from the
redemption will be sent by check to your address of record. We reserve the right
to increase the investment minimums.
SIGNATURE GUARANTEE
To protect your accounts from fraud, some transactions will require a signature
guarantee. Which transactions will require a signature guarantee will depend on
which service options you elect when you open your account. For example, if you
choose "In Writing Only," a signature guarantee is required when:
o redeeming more than $25,000; or
o establishing or increasing a Check-A-Month or automatic
transfer on an existing account.
You can obtain a signature guarantee from a bank or trust company, credit union,
broker-dealer, securities exchange or association, clearing agency or savings
association, as defined by federal law.
For a more in-depth explanation of our signature guarantee policy, or if you
live outside the United States and would like to know how to obtain a signature
guarantee, please consult our Investor Services Guide.
We reserve the right to require a signature guarantee on any transaction, or to
change this policy at any time.
SPECIAL SHAREHOLDER SERVICES
We offer several service options to make your account easier to manage. These
are listed on the account application. Please make note of these options and
elect the ones that are appropriate for you. Be aware that the "Full Services"
option offers you the most flexibility. You will find more information about
each of these service options in our Investor Services Guide.
Our special shareholder services include:
Automated Information Line
We offer an Automated Information Line, 24 hours a day, seven days a week, at
1-800-345-8765. By calling the Automated Information Line, you may listen to
fund prices, yields and total return figures. You may also use the Automated
Information Line to make investments into your accounts (if we have your bank
information on file) and obtain your share balance, value and most recent
transactions. If you have authorized us to accept telephone instructions, you
also may exchange shares from one fund to another via the Automated Information
Line. Redemption instructions cannot be given via the Automated Information
Line.
Online Account Access
You may contact us 24 hours a day, seven days a week, at www.americancentury.com
to access daily share prices, receive updates on major market indices and view
historical performance of the fund. If you select "Full Services" on your
application, you can use your personal access code and Social Security number to
view your account balance and account activity, make subsequent investments from
your bank account or exchange shares from one fund to another.
Open Order Service
Through our open order service, you may designate a price at which to buy shares
of a variable-priced fund by exchange from one of our money market funds, or a
price at which to sell shares of a variable-priced fund by exchange to one of
our money market funds. The designated purchase price must be equal to or lower,
or the designated sale price equal to or higher, than the variable-priced fund's
net asset value at the time the order is placed. If the designated price is met
within 90 calendar days, we will execute your exchange order automatically at
that price (or better). Open orders not executed within 90 days will be
canceled.
If the fund you have selected deducts a distribution from its share price, your
order price will be adjusted accordingly so the distribution does not
inadvertently trigger an open order transaction on your behalf. If you close or
re-register the account from which the shares are to be redeemed, your open
order will be canceled.
Because of their time-sensitive nature, open order transactions are accepted
only by telephone or in person. These transactions are subject to exchange
limitations described in each fund's prospectus, except that orders and
cancellations received before 2 p.m. Central time are effective the same day,
and orders or cancellations received after 2 p.m. Central time are effective the
next business day.
Tax-Qualified Retirement Plans
The fund is available for your tax-deferred retirement plan. Call or write us
and request the appropriate forms for:
o Individual Retirement Accounts (IRAs);
o 403(b)plans for employees of public school systems and non-profit
organizations; or
o Profit sharing plans and pension plans for corporations and other
employers.
If your IRA and 403(b) accounts do not total $10,000, each account is subject to
an annual $10 fee, up to a total of $30 per year.
You can also transfer your tax-deferred plan to us from another company or
custodian. Call or write us for a Request to Transfer form.
IMPORTANT POLICIES REGARDING YOUR INVESTMENTS
Every account is subject to policies that could affect your investment. Please
refer to the Investor Services Guide for further information about the policies
discussed below, as well as further detail about the services we offer.
(1) We reserve the right for any reason to suspend the offering of shares
for a period of time, or to reject any specific purchase order (including
purchases by exchange). Additionally, purchases may be refused if, in the
opinion of the manager, they are of a size that would disrupt the management of
the fund.
(2) We reserve the right to make changes to any stated investment
requirements, including those that relate to purchases, transfers and
redemptions. In addition, we also may alter, add to or terminate any investor
services and privileges. Any changes may affect all shareholders or only certain
series or classes of shareholders.
(3) Shares being acquired must be qualified for sale in your state of
residence.
(4) Transactions requesting a specific price and date, other than open
orders, will be refused. Once you have mailed or otherwise transmitted your
transaction instructions to us, they may not be modified or canceled.
(5) If a transaction request is made by a corporation, partnership, trust,
fiduciary, agent or unincorporated association, we will require evidence
satisfactory to us of the authority of the individual making the request.
(6) We have established procedures designed to assure the authenticity of
instructions received by telephone. These procedures include requesting personal
identification from callers, recording telephone calls, and providing written
confirmations of telephone transactions. These procedures are designed to
protect shareholders from unauthorized or fraudulent instructions. If we do not
employ reasonable procedures to confirm the genuineness of instructions, then we
may be liable for losses due to unauthorized or fraudulent instructions. The
company, its transfer agent and manager will not be responsible for any loss due
to instructions they reasonably believe are genuine.
(7) All signatures should be exactly as the name appears in the
registration. If the owner's name appears in the registration as Mary Elizabeth
Jones, she should sign that way and not as Mary E. Jones.
(8) Unusual stock market conditions have in the past resulted in an
increase in the number of shareholder telephone calls. If you experience
difficulty in reaching us during such periods, you may send your transaction
instructions by mail, express mail or courier service, or you may visit one of
our Investor Centers. You also may use our Automated Information Line if you
have requested and received an access code and are not attempting to redeem
shares.
(9) If you fail to provide us with the correct certified taxpayer
identification number, we may reduce any redemption proceeds by $50 to cover the
penalty the IRS will impose on us for failure to report your correct taxpayer
identification number on information reports.
(10) We will perform special inquiries on shareholder accounts. A research
fee of $15 per hour may be applied.
REPORTS TO SHAREHOLDERS
At the end of each calendar quarter, we will send you a consolidated statement
that summarizes all of your American Century holdings, as well as an individual
statement for each fund you own that reflects all year-to-date activity in your
account. You may request a statement of your account activity at any time.
With the exception of most automatic transactions, each time you invest, redeem,
transfer or exchange shares, we will send you a confirmation of the transaction.
See the Investor Services Guide for more detail.
CAREFULLY REVIEW ALL THE INFORMATION RELATING TO TRANSACTIONS ON YOUR STATEMENTS
AND CONFIRMATIONS TO ENSURE THAT YOUR INSTRUCTIONS WERE ACTED ON PROPERLY.
PLEASE NOTIFY US IMMEDIATELY IN WRITING IF THERE IS AN ERROR. IF YOU FAIL TO
PROVIDE NOTIFICATION OF AN ERROR WITH REASONABLE PROMPTNESS, I.E., WITHIN 30
DAYS OF NON-AUTOMATIC TRANSACTIONS OR WITHIN 30 DAYS OF THE DATE OF YOUR
CONSOLIDATED QUARTERLY STATEMENT, IN THE CASE OF AUTOMATIC TRANSACTIONS, WE WILL
DEEM YOU TO HAVE RATIFIED THE TRANSACTION.
No later than January 31 of each year, we will send you reports that you may use
in completing your U.S. income tax return. See the Investor Services Guide for
more information.
Each year, we will send you an annual and a semiannual report relating to your
fund, each of which is incorporated herein by reference. The annual report
includes audited financial statements and a list of portfolio securities as of
the fiscal year end. The semiannual report includes unaudited financial
statements for the first six months of the fiscal year, as well as a list of
portfolio securities at the end of the period. You also will receive an updated
prospectus at least once each year. Please read these materials carefully, as
they will help you understand your fund.
EMPLOYER-SPONSORED RETIREMENT PLANS AND INSTITUTIONAL ACCOUNTS
Information contained in our Investor Services Guide pertains to shareholders
who invest directly with American Century rather than through an
employer-sponsored retirement plan or through a financial intermediary.
If you own or are considering purchasing fund shares through an
employer-sponsored retirement plan, your ability to purchase shares of the
funds, exchange them for shares of other American Century funds, and redeem them
will depend on the terms of your plan.
If you own or are considering purchasing fund shares through a bank,
broker-dealer, insurance company or other financial intermediary, your ability
to purchase, exchange and redeem shares will depend on your agreement with, and
the policies of, such financial intermediary.
You may reach one of our Institutional Service Representatives by calling
1-800-345-3533 to request information about our funds and services, to obtain a
current prospectus or to get answers to any questions about our funds that you
are unable to obtain through your plan administrator or financial intermediary.
ADDITIONAL INFORMATION YOU SHOULD KNOW
SHARE PRICE
WHEN SHARE PRICE IS DETERMINED
The price of your shares is also referred to as their net asset value. Net asset
value is determined by calculating the total value of a fund's assets, deducting
total liabilities and dividing the result by the number of shares outstanding.
For all American Century funds, except funds issued by American Century Target
Maturities Trust, net asset value is determined as of the close of regular
trading on each day that the New York Stock Exchange is open, usually 3 p.m.
Central time. The net asset values for Target Maturities funds are determined
one hour prior to the close of the Exchange.
Investments and requests to redeem or exchange shares will receive the share
price next determined after receipt by us of the investment, redemption or
exchange request. For example, investments and requests to redeem or exchange
shares received by us or one of our agents or designees before the time as of
which the net asset value of the fund is determined, are effective on, and will
receive the price determined, that day. Investment, redemption and exchange
requests received thereafter are effective on, and receive the price determined
as of, the close of the Exchange on the next day the Exchange is open.
Investments are considered received only when payment is received by us. Wired
funds are considered received on the day they are deposited in our bank account
if they are deposited before the time as of which the net asset value of the
fund is determined.
Investments by telephone pursuant to your prior authorization to us to draw on
your bank account are considered received at the time of your telephone call.
Investment and transaction instructions received by us on any business day by
mail prior to the time as of which the net asset value of the fund is
determined, will receive that day's price. Investments and instructions received
after that time will receive the price determined on the next business day.
If you invest in fund shares through an employer-sponsored retirement plan or
other financial intermediary, it is the responsibility of your plan recordkeeper
or financial intermediary to transmit your purchase, exchange and redemption
requests to the funds' transfer agent prior to the applicable cut-off time for
receiving orders and to make payment for any purchase transactions in accordance
with the funds' procedures or any contractual arrangements with the funds or the
funds' distributor in order for you to receive that day's price.
We have contractual relationships with certain financial intermediaries in which
such intermediaries represent that they have systems to track the time at which
investment orders are received and to segregate orders received at different
times. Based on these representations, the fund has authorized such
intermediaries and their designees to accept purchase and redemption orders on
the fund's behalf up to the applicable cut-off time. The fund will be deemed to
have received such orders upon acceptance by the duly authorized intermediary,
and such orders will be priced at the fund's net asset value next determined
after acceptance on the fund's behalf by such intermediary.
HOW SHARE PRICE IS DETERMINED
The valuation of assets for determining net asset value may be summarized as
follows:
The portfolio securities of the fund, except as otherwise noted, listed or
traded on a domestic securities exchange are valued at the last sale price on
that exchange. Portfolio securities primarily traded on foreign securities
exchanges generally are valued at the preceding closing values of such
securities on the exchange where primarily traded. If no sale is reported, or if
local convention or regulation so provides, the mean of the latest bid and asked
prices is used. Depending on local convention or regulation, securities traded
over-the-counter are priced at the mean of the latest bid and asked prices, or
at the last sale price. When market quotations are not readily available,
securities and other assets are valued at fair value as determined in accordance
with procedures adopted by the Board of Directors.
Debt securities not traded on a principal securities exchange are valued through
valuations obtained from a commercial pricing service or at the most recent mean
of the bid and asked prices provided by investment dealers in accordance with
procedures established by the Board of Directors.
The value of an exchange-traded foreign security is determined in its national
currency as of the close of trading on the foreign exchange on which it is
traded or as of the close of business on the New York Stock Exchange, if that is
earlier. That value is then converted to dollars at the prevailing foreign
exchange rate.
Trading in securities on European and Far Eastern securities exchanges and
over-the-counter markets is normally completed at various times before the close
of business on each day that the New York Stock Exchange is open. If an event
were to occur after the value of a security was established but before the net
asset value per share was determined that was likely to materially change the
net asset value, then that security would be valued at fair value as determined
in accordance with procedures adopted by the Board of Directors.
Trading of these securities in foreign markets may not take place on every New
York Stock Exchange business day. In addition, trading may take place in various
foreign markets on Saturdays or on other days when the New York Stock Exchange
is not open and on which a fund's net asset value is not calculated. Therefore,
such calculation does not take place contemporaneously with the determination of
the prices of many of the portfolio securities used in such calculation and the
value of a fund's portfolio may be affected on days when shares of the fund may
not be purchased or redeemed.
WHERE TO FIND INFORMATION ABOUT SHARE PRICE
The net asset value of the Investor Class of the fund is published in leading
newspapers daily. The net asset value may be obtained by calling us or by
accessing our Web site (www.americancentury.com).
DISTRIBUTIONS
Small Cap Quantitative's dividends are declared and paid quarterly in March,
June, September and December.
The objective of Small Cap Quantitative is capital appreciation and not the
production of distributions. You are encouraged to measure the success of your
investment by the value of your investment at any given time and not by the
distributions you receive.
You will begin to participate in the distributions the day after your purchase
is effective. See "When Share Price Is Determined," page xx. If you redeem
shares, you will receive the distribution declared for the day of the
redemption. If all shares are redeemed, the distribution on the redeemed shares
will be included with your redemption proceeds.
Distributions from net realized securities gains, if any, generally are declared
and paid once a year, but the fund may make distributions on a more frequent
basis to comply with the distribution requirements of the Internal Revenue Code,
in all events in a manner consistent with the provisions of the Investment
Company Act.
Participants in employer-sponsored retirement or savings plans must reinvest all
distributions. For shareholders investing through taxable accounts,
distributions will be reinvested unless you elect to receive them in cash.
Distributions of less than $10 generally will be reinvested. Distributions made
shortly after a purchase by check or ACH may be held up to 15 days. You may
elect to have distributions on shares held in certain IRAs and 403(b) plans paid
in cash only if you are at least 591/2 years old or permanently and totally
disabled. Distribution checks normally are mailed within seven days after the
record date. Please consult our Investor Services Guide for further information
regarding your distribution options.
A distribution on shares of a fund does not increase the value of your shares or
your total return. At any given time the value of your shares includes the
undistributed net gains, if any, realized by the fund on the sale of portfolio
securities, and undistributed dividends and interest received, less fund
expenses.
Because such gains and dividends are included in the price of your shares, when
they are distributed the price of your shares is reduced by the amount of the
distribution. If you buy your shares through a taxable account just before the
distribution, you will pay the full price for your shares, and then receive a
portion of the purchase price back as a taxable distribution. See "Taxes," this
page.
TAXES
The fund has elected to be taxed under Subchapter M of the Internal Revenue
Code, which means that to the extent its income is distributed to shareholders,
it pays no income tax.
TAX-DEFERRED ACCOUNTS
If fund shares are purchased through tax-deferred accounts, such as a qualified
employer-sponsored retirement or savings plan, income and capital gains
distributions paid by the fund will generally not be subject to current
taxation, but will accumulate in your account under the plan on a tax-deferred
basis.
Employer-sponsored retirement and savings plans are governed by complex tax
rules. If you elect to participate in your employer's plan, consult your plan
administrator, your plan's summary plan description, or a professional tax
advisor regarding the tax consequences of participation in the plan,
contributions to, and withdrawals or distributions from the plan.
TAXABLE ACCOUNTS
If fund shares are purchased through taxable accounts, distributions of net
investment income and net short-term capital gains are taxable to you as
ordinary income, except as described below. The dividends from net income may
qualify for the 70% dividends received deduction for corporations to the extent
that the fund held shares receiving the dividend for more than 45 days.
Distributions from gains on assets held longer than 12 months but no more than
18 months (28% rate gain) and/or assets held longer than 18 months (20% rate
gain) are taxable as long-term gains regardless of the length of time you have
held the shares. However, you should note that any loss realized upon the sale
or redemption of shares held for six months or less will be treated as a
long-term capital loss to the extent of any distribution of long-term capital
gain (28% or 20% rate gain) to you with respect to such shares.
Distributions are taxable to you regardless of whether they are taken in cash or
reinvested, even if the value of your shares is below your cost. If you purchase
shares shortly before a distribution, you must pay income taxes on the
distribution, even though the value of your investment (plus cash received, if
any) will not have increased. In addition, the share price at the time you
purchase shares may include unrealized gains in the securities held in the
investment portfolio of the fund. If these portfolio securities are subsequently
sold and the gains are realized, they will, to the extent not offset by capital
losses, be paid to you as a distribution of capital gains and will be taxable to
you as short-term or long-term capital gains (28% and/or 20% rate gain).
In January of the year following the distribution, if you own shares in a
taxable account, you will receive a Form 1099-DIV notifying you of the status of
your distributions for federal income tax purposes.
Distributions also may be subject to state and local taxes, even if all or a
substantial part of such distributions are derived from interest on U.S.
government obligations which, if you received them directly, would be exempt
from state income tax. However, most but not all states allow this tax exemption
to pass through to fund shareholders when a fund pays distributions to its
shareholders. You should consult your tax advisor about the tax status of such
distributions in your own state.
If you have not complied with certain provisions of the Internal Revenue Code
and Regulations, we are required by federal law to withhold and remit to the IRS
31% of reportable payments (which may include dividends, capital gains
distributions and redemptions). Those regulations require you to certify that
the Social Security number or tax identification number you provide is correct
and that you are not subject to 31% withholding for previous under-reporting to
the IRS. You will be asked to make the appropriate certification on your
application. Payments reported by us that omit your Social Security number or
tax identification number will subject us to a penalty of $50, which will be
charged against your account if you fail to provide the certification by the
time the report is filed. This charge is not refundable.
Redemption of shares of a fund (including redemptions made in an exchange
transaction) will be a taxable transaction for federal income tax purposes and
shareholders generally will recognize a gain or loss in an amount equal to the
difference between the basis of the shares and the amount received. Assuming
that shareholders hold such shares as a capital asset, the gain or loss will be
a capital gain or loss and generally will be considered long-term, subject to
tax at a maximum rate of 28% if shareholders have held such shares for a period
of more than 12 months but no more than 18 months and long-term, subject to tax
at a maximum rate of 20% if shareholders have held such shares for a period of
more than 18 months. If a loss is realized on the redemption of fund shares, the
reinvestment in additional fund shares within 30 days before or after the
redemption may be subject to the "wash sale" rules of the Internal Revenue Code,
resulting in a postponement of the recognition of such loss for federal income
tax purposes.
In addition to the federal income tax consequences described above relating to
an investment in a fund, there may be other federal, state or local tax
considerations that depend upon the circumstances of each particular investor.
Prospective shareholders are therefore urged to consult their tax advisors with
respect to the effect of this investment on their own specific situations.
MANAGEMENT
INVESTMENT MANAGEMENT
The fund is a diversified, open-end series of American Century Quantitative
Equity Funds (the company). Under the laws of the State of California, the Board
of Directors is responsible for managing the business and affairs of the
company. Acting pursuant to an investment management agreement entered into with
the fund, American Century Investment Management, Inc. serves as the manager of
the fund. Its principal place of business is American Century Tower, 4500 Main
Street, Kansas City, Missouri 64111. The manager has been providing investment
advisory services to investment companies and institutional clients since it was
founded in 1958.
The manager supervises and manages the investment portfolio of the fund and
directs the purchase and sale of its investment securities. It utilizes a team
of portfolio managers, assistant portfolio managers and analysts acting together
to manage the assets of the fund. The team meets regularly to review portfolio
holdings and to discuss purchase and sale activity. The team adjusts holdings in
the fund's portfolio as it deems appropriate in pursuit of the fund's investment
objective. Individual portfolio manager members of the team also may adjust
portfolio holdings of the fund or of sectors of the fund as necessary between
team meetings.
The portfolio manager members of the team managing the fund and their work
experience for the last five years are as follows:.
John Schniedwind, Senior Vice President and Group Leader--Quantitative Equity,
joined American Century in 1982, and has been a member of the team that manages
Small Cap Quantitative since its inception.
The activities of the manager are subject only to directions of the fund's Board
of Directors. The manager pays all the expenses of the fund except brokerage,
taxes, interest, fees and expenses of the non-interested person directors
(including counsel fees) and extraordinary expenses.
For the services provided to the fund, the manager receives a monthly fee based
on a percentage of the average net assets of the fund. The annual rate at which
this fee is assessed is determined monthly in a two-step process: First, a fee
rate schedule is applied to the assets of all of the funds in a fund's
investment category which are managed by the manager (the Investment Category
Fee). The three investment categories are: Money Market Funds, Bond Funds and
Equity Funds. Second, a separate fee rate schedule is applied to the assets of
all of the funds managed by the manager (the Complex Fee). The Investment
Category Fee and the Complex Fee are then added to determine the unified
management fee payable by the fund to the manager. Currently, the Investment
Category Fee for the fund is an annual rate of 0.60% of the average net assets
of the fund. The Complex Fee is currently an annual rate of 0.30% of the average
net assets of the fund. Further information about the calculation of the annual
management fee is contained in the Statement of Additional Information.
On the first business day of each month, the fund pays a management fee to the
manager for the previous month at the specified rate. The fee for the previous
month is calculated by multiplying the applicable fee for the fund by the
aggregate average daily closing value of the fund's net assets during the
previous month, and further multiplying that product by a fraction, the
numerator of which is the number of days in the previous month and the
denominator of which is 365 (366 in leap years).
CODE OF ETHICS
The fund and the manager have adopted a Code of Ethics that restricts personal
investing practices by employees of the manager and its affiliates. Among other
provisions, the Code of Ethics requires that employees with access to
information about the purchase or sale of securities in the fund's portfolios
obtain preclearance before executing personal trades. With respect to Portfolio
Managers and other investment personnel, the Code of Ethics prohibits
acquisition of securities in an initial public offering, as well as profits
derived from the purchase and sale of the same security within 60 calendar days.
These provisions are designed to ensure that the interests of fund shareholders
come before the interests of the people who manage those funds.
TRANSFER AND ADMINISTRATIVE SERVICES
American Century Services Corporation, American Century Tower, 4500 Main Street,
Kansas City, Missouri 64111, acts as transfer agent and dividend-paying agent
for the fund. It provides facilities, equipment and personnel to the fund, and
is paid for such services by the manager.
Certain recordkeeping and administrative services that would otherwise be
performed by the transfer agent may be performed by an insurance company or
other entity providing similar services for various retirement plans using
shares of the fund as a funding medium, by broker-dealers and financial advisors
for their customers investing in shares of American Century or by sponsors of
multi mutual fund no- or low-transaction fee programs. The manager or an
affiliate may enter into contracts to pay them for such recordkeeping and
administrative services out of its unified management fee.
Although there is no sales charge levied by the fund, transactions in shares of
the fund may be executed by brokers or investment advisors who charge a
transaction-based fee or other fee for their services. Such charges may vary
among broker-dealers and financial advisors, but in all cases will be retained
by the broker-dealer or financial advisor and not remitted to the fund or the
manager. You should be aware of the fact that these transactions may be made
directly with American Century without incurring such fees.
From time to time, special services may be offered to shareholders who maintain
higher share balances in our family of funds. These services may include the
waiver of minimum investment requirements, expedited confirmation of shareholder
transactions, newsletters and a team of personal representatives. Any expenses
associated with these special services will be paid by the manager or its
affiliates.
The manager and the transfer agent are both wholly owned by American Century
Companies, Inc. (ACC). James E. Stowers Jr., Chairman of the Board of Directors
of ACC, controls ACC by virtue of his ownership of a majority of its common
stock.
Pursuant to a Sub-Administration Agreement with the manager, Funds Distributor
Inc. (FDI) serves as the Co-Administrator for the funds. FDI is responsible for
(i) providing certain officers of the funds and (ii) reviewing and filing
marketing and sales literature on behalf of the funds. The fees and expenses of
FDI are paid by the manager.
DISTRIBUTION OF FUND SHARES
The fund's shares are distributed by FDI, a registered broker-dealer. FDI is a
wholly-owned indirect subsidiary of Boston Institutional Group, Inc. FDI's
principal business address is 60 State Street, Suite 1300, Boston, Massachusetts
02109. The Investor Class of shares does not pay any commissions or sales loads
to the distributor or to any other broker-dealers or financial intermediaries in
connection with the distribution of fund shares.
Investors may open accounts with American Century only through the distributor.
All purchase transactions in the funds offered by this Prospectus are processed
by the transfer agent, which is authorized to accept any instructions relating
to fund accounts. All purchase orders must be accepted by the distributor. All
fees and expenses of FDI in acting as distributor for the fund are paid by the
manager.
FURTHER INFORMATION ABOUT AMERICAN CENTURY
American Century Quantitative Equity Funds is an open-end management investment
company. Its business and affairs are managed by its officers under the
direction of its Board of Directors.
The principal office of the fund is American Century Tower, 4500 Main Street,
P.O. Box 419200, Kansas City, Missouri 64141-6200. All inquiries may be made by
mail to that address, or by telephone to 1-800-345-2021 (international calls:
816-531-5575).
American Century Quantitative Equity Funds issues shares with no par value. Each
series is commonly referred to as a fund. The assets belonging to each series of
shares are held separately by the custodian and in effect each series is a
separate fund.
American Century offers three classes of the fund: an Investor Class, an
Institutional Class, and an Advisor Class. The shares offered by this Prospectus
are Investor Class shares and have no up-front charges, commissions, or 12b-1
fees.
The other classes of shares are primarily offered to institutional investors or
through institutional distribution channels, such as employer-sponsored
retirement plans or through banks, broker-dealers, insurance companies or other
financial intermediaries. The other classes have different fees, expenses,
and/or minimum investment requirements than the Investor Class. The difference
in the fee structures among the classes is the result of their separate
arrangements for shareholder and distribution services and not the result of any
difference in amounts charged by the manager for core investment advisory
services. Accordingly, the core investment advisory expenses do not vary by
class. Different fees and expenses will affect performance. For additional
information concerning the other classes of shares not offered by this
Prospectus, call us at 1-800-345-3533 or contact a sales representative or
financial intermediary who offers those classes of shares.
Except as described below, all classes of shares of a fund have identical
voting, dividend, liquidation and other rights, preferences, terms and
conditions. The only differences among the various classes are (a) each class
may be subject to different expenses specific to that class, (b) each class has
a different identifying designation or name, (c) each class has exclusive voting
rights with respect to matters solely affecting such class, (d) each class may
have different exchange privileges, and (e) the Institutional Class may provide
for automatic conversion from that class into shares of the Investor Class of
the same fund.
Each share, irrespective of series or class, is entitled to one vote for each
dollar of net asset value applicable to such share on all questions, except for
those matters that must be voted on separately by the series or class of shares
affected. Matters affecting only one series or class are voted upon only by that
series or class.
Shares have non-cumulative voting rights, which means that the holders of more
than 50% of the votes cast in an election of directors can elect all of the
directors if they choose to do so, and in such event the holders of the
remaining votes will not be able to elect any person or persons to the Board of
Directors.
Unless required by the Investment Company Act, it will not be necessary for the
fund to hold annual meetings of shareholders. As a result, shareholders may not
vote each year on the election of directors or the appointment of auditors.
However, pursuant to the fund's by-laws, the holders of shares representing at
least 10% of the votes entitled to be cast may request the fund to hold a
special meeting of shareholders. We will assist in the communication with other
shareholders.
WE RESERVE THE RIGHT TO CHANGE ANY OF OUR POLICIES, PRACTICES AND PROCEDURES
DESCRIBED IN THIS PROSPECTUS, INCLUDING THE STATEMENT OF ADDITIONAL INFORMATION,
WITHOUT SHAREHOLDER APPROVAL EXCEPT IN THOSE INSTANCES WHERE SHAREHOLDER
APPROVAL IS EXPRESSLY REQUIRED.
P.O. Box 419200
Kansas City, Missouri
64141-6200
Investor Services:
1-800-345-2021 or 816-531-5575
Automated Information Line:
1-800-345-8765
Telecommunications Device for the Deaf:
1-800-634-4113 or 816-444-3485
Fax: 816-340-4655
www.americancentury.com
9708
SH-BKT-9197
<PAGE>
PROSPECTUS
June 30, 1998
American
Century
Group
Small Cap Quantitative
INSTITUTIONAL CLASS
AMERICAN CENTURY INVESTMENTS
FAMILY OF FUNDS
American Century Investments offers you nearly 70 fund choices covering stocks,
bonds, money markets, specialty investments and blended portfolios. To help you
find the funds that may meet your investment needs, American Century funds have
been divided into three groups based on investment style and objectives. These
groups, which appear below, are designed to help simplify your fund decisions.
AMERICAN CENTURY INVESTMENTS
BENHAM GROUP AMERICAN CENTURY GROUP TWENTIETH CENTURY GROUP
MONEY MARKET FUNDS ASSET ALLOCATION &
GOVERNMENT BOND FUNDS BALANCED FUNDS
DIVERSIFIED BOND FUNDS CONSERVATIVE EQUITY FUNDS GROWTH FUNDS
MUNICIPAL BOND FUNDS SPECIALTY FUNDS INTERNATIONAL FUNDS
Small Cap Quantitative
PROSPECTUS
June 30, 1998
Small Cap Quantitative
Institutional Class
American Century Quantitative Equity Funds
American Century Quantitative Equity Funds is a part of American Century
Investments, a family of funds that includes nearly 70 no-load mutual funds
covering a variety of investment opportunities. One of the funds from our
American Century Group of funds is described in this Prospectus. Its investment
objective is listed on page 2 of this Prospectus. The other funds are described
in separate prospectuses.
The fund's shares offered in this Prospectus (the Institutional Class shares)
are sold at their net asset value with no sales charges or commissions.
The Institutional Class shares are made available for purchase by large
institutional shareholders, such as bank trust departments, corporations,
endowments, foundations and financial advisors that meet the funds' minimum
investment requirements. Institutional Class shares are not available for
purchase by insurance companies or participant-directed employer-sponsored
retirement plans.
This Prospectus gives you information about the fund that you should know before
investing. Please read this Prospectus carefully and retain it for future
reference. Additional information is included in the Statement of Additional
Information dated June 30, 1998, and filed with the Securities and Exchange
Commission. It is incorporated into this Prospectus by reference. To obtain a
copy without charge, call or write:
American Century Investments
4500 Main Street o P.O. Box 419385
Kansas City, Missouri 64141-6385o 1-800-345-3533
International calls: 816-531-5575
Telecommunications Device for the Deaf:
1-800-345-1833o In Missouri: 816-444-3038
www.americancentury.com
Additional information, including this Prospectus and the Statement of
Additional Information, may be obtained by accessing the Web site maintained by
the SEC (www.sec.gov).
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
INVESTMENT OBJECTIVE OF THE FUND
AMERICAN CENTURY SMALL CAP QUANTITATIVE FUND
Small Cap Quantitative seeks long-term capital appreciation by investing
primarily in equity securities of small companies.
There is no assurance that the fund will achieve its investment objective.
NO PERSON IS AUTHORIZED BY THE FUND TO GIVE ANY INFORMATION OR MAKE ANY
REPRESENTATION OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS OR IN OTHER PRINTED
OR WRITTEN MATERIAL ISSUED BY OR ON BEHALF OF THE FUND, AND YOU SHOULD NOT RELY
ON ANY OTHER INFORMATION OR REPRESENTATION.
TABLE OF CONTENTS
Investment Objectives of the Funds
Transaction and Operating Expense Table
Performance Information of Other Class
INFORMATION REGARDING THE FUNDS
Investment Policies of the Funds
Income & Growth
Equity Growth
Risk Factors and Investment Techniques
Other Investment Practices, Their Characteristics
and Risks
Portfolio Turnover
Convertible Securities
Futures Contracts
and Options Thereon
Short-Term Instruments
Foreign Securities
Securities Lending
Other Techniques
Performance Advertising
HOW TO INVEST WITH AMERICAN CENTURY INVESTMENTS
American Century Investments
Investing in American Century How to Open an Account
By Mail
By Wire
By Exchange
In Person
Subsequent Investments
By Mail
By Telephone
By Wire
In Person
Automatic Investment Plan
Minimum Investment
How to Exchange from One Account to Another
By Mail
By Telephone
How to Redeem Shares
By Mail
By Telephone
By Check-A-Month
Other Automatic Redemptions
Redemption Proceeds
By Check
By Wire and ACH
Signature Guarantee
Special Shareholder Services
Open Order Service
Tax-Qualified Retirement Plans
Important Policies Regarding Your Investments
Reports to Shareholders
Customers of Banks, Broker-Dealers and
Other Financial Intermediaries
ADDITIONAL INFORMATION YOU SHOULD KNOW
Share Price
When Share Price Is Determined
How Share Price Is Determined
Where to Find Information About Share Price
Distributions
Taxes
Tax-Deferred Accounts
Taxable Accounts
Management
Investment Management
Code of Ethics
Transfer and Administrative Services
Distribution of Fund Shares
Further Information About American Century
TRANSACTION AND OPERATING EXPENSE TABLE
Small Cap
Quantitative
SHAREHOLDER TRANSACTION EXPENSES:
Maximum Sales Load Imposed on Purchases ........................... none
Maximum Sales Load Imposed on Reinvested Dividends ................ none
Deferred Sales Load ............................................... none
Redemption Fee .................................................... none
Exchange Fee ...................................................... none
ANNUAL FUND OPERATING EXPENSES:
(as a percentage of net assets)
Management Fees(1) ................................................ 0.70%
12b-1 Fees ........................................................ none
Other Expenses .................................................... 0.01%
Total Fund Operating Expenses ..................................... 0.71%
EXAMPLE
You would pay the following expenses on a 1 year $ 7
$1,000 investment, assuming a 5% annual return and 3 years 23
redemption at the end of each time period: 5 years 40
10 years 88
- ----------
(1) A portion of the management fee may be paid by American Century Investment
Management, Inc. (the manager) to unaffiliated third parties who provide
recordkeeping and administrative services that would otherwise be performed
by an affiliate of the manager. See "Management - Transfer and
Administrative Services", page xx.
The purpose of this table is to help you understand the various costs and
expenses that you, as a shareholder, will bear directly or indirectly in
connection with an investment in the class of shares of the fund offered by this
Prospectus. The example set forth above assumes reinvestment of all dividends
and distributions and uses a 5% annual rate of return as required by SEC
regulations.
Neither the 5% rate of return nor the expenses shown above should be considered
indications of past or future returns and expenses. Actual returns and expenses
may be greater or less than those shown.
The shares offered by this Prospectus are Institutional Class shares. The fund
offers two other classes of shares, one of which is primarily made available to
retail investors and one that is primarily made available to financial
intermediaries. The other classes have different fee structures than the
Institutional Class. The difference in the fee structures among the classes is
the result of their separate arrangements for shareholder and distribution
services and not the result of any difference in amounts charged by the manager
for core investment advisory services. Accordingly, the core investment advisory
expenses do not vary by class. A difference in fees will result in different
performance for the other classes. For additional information about the various
classes, see "Further Information About American Century," page xx.
INFORMATION REGARDING THE FUND
INVESTMENT POLICIES OF THE FUND
The fund has adopted certain investment restrictions that are set forth in the
Statement of Additional Information. Those restrictions, as well as the
investment objective of the fund identified on page 2 of this Prospectus, and
any other investment policies designated as "fundamental" in this Prospectus or
in the Statement of Additional Information, cannot be changed without
shareholder approval. The fund has implemented additional investment policies
and practices to guide its activities in the pursuit of its investment
objective. These policies and practices, which are described throughout this
Prospectus, are not designated as fundamental policies and may be changed
without shareholder approval.
Small Cap Quantitative's investment objective is to seek long-term capital
appreciation by investing primarily in equity securities of small companies.
Small Cap Quantitative is designed for investors whose financial goals include
long-term capital growth.
The fund will invest primarily in common stocks of smaller companies, as
determined by market capitalization. A company shall be considered to have a
smaller market capitalization if, at the time of investment, it has a market
capitalization which is not greater than the market capitalization of the
largest company contained in the S&P Small Cap 600 Index. The S&P Small Cap 600
Index is a stock index that tracks the performance of equity securities of
smaller capitalization companies. As of December 31, 1997, the largest company
contained in the S&P Small-Cap 600 Index had a market capitalization of
approximately $2.7 billion, while the median company contained in the index had
a market capitalization of approximately $499 million.
The manager seeks a total return for Small Cap Quantitative that exceeds the
total return of the S&P 600. Of course, Small Cap Quantitative's total return
may be higher or lower than the S&P 600's return over any period of time.
Small Cap Quantitative's investment objective is to seek long-term capital
appreciation by investing primarily in equity securities of small companies.
Small Cap Quantitative is designed for investors whose financial goals include
long-term capital growth.
The fund will invest primarily in common stocks of smaller companies, as
determined by market capitalization. A company shall be considered to have a
smaller market capitalization if, at the time of investment, it has a market
capitalization which is not greater than the market capitalization of the
largest company contained in the S&P Small Cap 600 Index. The S&P Small Cap 600
Index is a stock index that tracks the performance of equity securities of
smaller capitalization companies. As of December 31, 1997, the largest company
contained in the S&P Small-Cap 600 Index had a market capitalization of
approximately $2.7 billion, while the median company contained in the index had
a market capitalization of approximately $499 million.
The manager seeks a total return for Small Cap Quantitative that exceeds the
total return of the S&P 600. Of course, Small Cap Quantitative's total return
may be higher or lower than the S&P 600's return over any period of time.
RISK FACTORS AND INVESTMENT TECHNIQUES
The manager uses quantitative management strategies in pursuit of the fund's
investment objective. Quantitative management combines two investment management
approaches. The first is to rank stocks based on their relative attractiveness.
The attractiveness of a stock is determined analytically by using a computer
model to combine valuation and growth measures. Examples of valuation measures
include price to book and price to cash flow ratios while examples of growth
measures include the rate of growth of a company's earnings and changes in
analysts' earnings estimates.
The second approach is to use a technique referred to as portfolio optimization.
Using a computer the manager constructs a portfolio (i.e. company names and
shares held in each) that seeks the optimal tradeoff between the risk of the
portfolio relative to a benchmark (i.e. the S&P 600) and the expected return of
the portfolio as measured by the stock ranking model.
Approximately 65% of the fund's portfolio holdings will be drawn from equity
securities of companies with a market capitalization within the range of those
which make up the S&P 600. In 1997, that capitalization range was $35 million to
$2.7 billion.
A fund's investment approach may cause it to be more heavily invested in some
industries than in others. However, the fund may not invest more than 25% of its
total assets in companies whose principal business activities are in the same
industry. In addition, the fund is a "diversified" investment company as defined
in the Investment Company Act of 1940 (the Investment Company Act). This means
that investments in any single issuer are limited by restrictions in the
Investment Company Act.
The fund may invest in securities or engage in transactions involving
instruments other than equity securities, as discussed in the section titled
"Other Investment Practices, Their Characteristics and Risks," see below.
OTHER INVESTMENT PRACTICES, THEIR
CHARACTERISTICS AND RISKS
For additional information, see "Additional Investment Restrictions" in the
Statement of Additional Information.
PORTFOLIO TURNOVER
Investment decisions to purchase and sell securities are based on the
anticipated contribution of the security in question to the fund's objective.
The manager considers the rate of portfolio turnover when it determines a change
is in order to achieve the objective and, accordingly under normal conditions
the annual portfolio turnover rate is not anticipated to exceed 150%.
The portfolio turnover of the fund may be higher than other mutual funds with
similar investment objectives. Higher turnover would generate correspondingly
greater brokerage commissions that the fund pays directly. Higher portfolio
turnover also may increase the likelihood that the capital gains, if any,
realized and distributed by the fund will include short-term capital gains,
which are taxable as ordinary income. When a security is sold, the manager seeks
whenever possible to minimize the capital gain that would be realized.
CONVERTIBLE SECURITIES
Although the fund's equity investments consist primarily of common stock, the
fund may buy securities convertible into common stock, such as convertible
bonds, convertible preferred stocks, and warrants. The manager may purchase
these securities if it believes that a company's convertible securities are
undervalued in the market.
FUTURES CONTRACTS AND OPTIONS THEREON
The fund may buy or sell futures contracts relating to groups of securities or
indices and write or buy put and call options relating to such futures
contracts.
For options sold, the fund will segregate cash or appropriate liquid assets
including equity securities and debt securities of any grade equal to the value
of securities underlying the option unless the option is otherwise covered.
The fund will deposit cash or appropriate liquid assets in a segregated
custodial account in an amount equal to the fluctuating market value of long
futures contracts it has purchased, less any margin deposited on its long
position. It may hold cash or acquire such debt obligations for the purpose of
making these deposits.
The fund may use futures and options transactions to maintain cash reserves
while remaining fully invested, to facilitate trading, to reduce transaction
costs, or to pursue higher investment returns when a futures contract is priced
more attractively than its underlying security or index.
Futures contracts and options thereon may subject the fund to greater and more
volatile risks than might otherwise be the case. The principal risks related to
the use of such instruments are (1) the offsetting correlation between movements
in the market price of the portfolio investments (held or intended) being hedged
and in the price of the futures contract or option may be imperfect; (2)
possible lack of a liquid secondary market for closing out futures or option
positions; (3) the need of additional portfolio management skills and
techniques; and (4) losses due to unanticipated market price movements. For a
hedge to be completely effective, the price change of the hedging instrument
should equal the price change of the securities being hedged. Such equal price
changes are not always possible because the investment underlying the hedging
instrument may not be the same investment that is being hedged.
The ordinary spreads between prices in the cash and futures markets, due to the
differences in the nature of those markets, are subject to distortion. Due to
the possibility of distortion, a correct forecast of general interest rate
trends by the manager may still not result in a successful transaction. The
manager may be incorrect in its expectations as to the extent of various
interest rate movements or the time span within which the movements take place.
See the Statement of Additional Information for further information about these
instruments and their risks.
SHORT-TERM INSTRUMENTS
For liquidity purposes, the fund may invest in high-quality money market
instruments with remaining maturities of one year or less.
The fund also may enter into repurchase agreements, collateralized by U.S.
government securities, with banks or broker-dealers that are deemed to present
minimal credit risk. Credit risk determinations are made by the manager pursuant
to guidelines established by the Board of Directors. A repurchase agreement
involves the purchase of a security and a simultaneous agreement to sell the
security back to the seller at a higher price. Delays or losses could result if
the party to the agreement defaults or becomes bankrupt.
The fund may invest up to 5% of its total assets in any money market fund
advised by the manager, provided that the investment is consistent with the
fund's investment policies and restrictions.
FOREIGN SECURITIES
The fund may invest in securities of foreign issuers, including instruments that
trade on domestic or foreign securities exchanges in U.S. dollars or foreign
currencies. Securities of foreign issuers may be affected by the strength of
foreign currencies relative to the U.S. dollar or by political or economic
developments in foreign countries. Foreign companies may not be subject to
accounting standards or governmental regulations comparable to those that affect
U.S. companies, and there may be less public information about their operations.
OTHER TECHNIQUES
The manager may buy other types of securities or employ other portfolio
management techniques on behalf of a fund including reverse repurchase
agreements. When SEC guidelines require it to do so, the fund will set aside
cash or appropriate liquid assets in a segregated account to cover the fund's
obligations.
PERFORMANCE ADVERTISING
From time to time, the fund may advertise performance data. Fund performance may
be shown by presenting one or more performance measurements, including
cumulative total return or average annual total return yield and effective
yield. Performance data may be quoted separately for the Investor Class and for
the other classes.
Cumulative total return data is computed by considering all elements of return,
including reinvestment of dividends and capital gains distributions, over a
stated period of time. Average annual total return is determined by computing
the annual compound return over a stated period of time that would have produced
the fund's cumulative total return over the same period if the fund's
performance had remained constant throughout.
A quotation of yield reflects a fund's income over a stated period of time
expressed as a percentage of the fund's share price. The effective yield is
calculated in a similar manner, but when annualized, the income earned by the
investment is assumed to be reinvested. The effective yield will be slightly
higher than the yield because of the compounding effect on the assumed
reinvestment.
Yield is calculated by adding over a 30-day (or one-month) period all interest
and dividend income (net of fund expenses) calculated on each day's market
values, dividing this sum by the average number of fund shares outstanding
during the period, and expressing the result as a percentage of the fund's share
price on the last day of the 30-day (or one-month) period. The percentage is
then annualized. Capital gains and losses are not included in the calculation.
Yields are calculated according to accounting methods that are standardized in
accordance with SEC rules for all stock and bond funds. Because yield accounting
methods differ from the methods used for other accounting purposes, a fund's
yield may not equal the income paid on its shares or the income reported in the
fund's financial statements.
The fund also may include in advertisements data comparing performance with the
performance of non-related investment media, published editorial comments and
performance rankings compiled by independent organizations (such as Lipper
Analytical Services, Inc.) and publications that monitor the performance of
mutual funds. Performance information may be quoted numerically or may be
presented in a table, graph or other illustration. In addition, fund performance
may be compared to well-known indices of market performance. Fund performance
also may be compared, on a relative basis, to other funds in our fund family.
This relative comparison, which may be based upon historical fund performance or
historical or expected volatility or other fund characteristics, may be
presented numerically, graphically or in text. Fund performance also may be
combined or blended with other funds in our fund family, and that combined or
blended performance may be compared to the same indices to which individual
funds may be compared.
All performance information advertised by the fund is historical in nature and
is not intended to represent or guarantee future results. The value of fund
shares when redeemed may be more or less than their original cost.
HOW TO INVEST WITH AMERICAN CENTURY INVESTMENTS
AMERICAN CENTURY INVESTMENTS
Small Cap Quantitative is a part of the American Century Investments family of
mutual funds. Our family provides a full range of investment opportunities, from
the aggressive equity growth funds in our Twentieth Century Group, to the fixed
income funds in our Benham Group, to the moderate risk and specialty funds in
our American Century Group. Please call 1-800-345-3533 for a brochure or
prospectuses for the other funds in the American Century Investments family.
To reduce expenses and demonstrate respect for our environment, we have
initiated a project through which we will eliminate duplicate copies of most
financial reports and prospectuses to most households and deliver account
statements to most households in a single envelope, even if they have more than
one account. If you would like additional copies of financial reports and
prospectuses or separate mailing of account statements, please call us.
INVESTING IN AMERICAN CENTURY
The following sections explain how to invest in American Century funds,
including purchases, redemptions, exchanges and special services. You will find
more detail about doing business with us by referring to the Investor Services
Guide that you will receive when you open an account.
If you own or are considering purchasing fund shares through an
employer-sponsored retirement plan or through a bank, broker-dealer or other
financial intermediary, the following sections, as well as the information
contained in our Investor Services Guide, may not apply to you. Please read
"Minimum Investment," page xx and "Customers of Banks, Broker-Dealers and Other
Financial Intermediaries," page xx.
HOW TO OPEN AN ACCOUNT
To open an account, you must complete and sign an application, furnishing your
taxpayer identification number. (You must also certify whether you are subject
to withholding for failing to report income to the IRS.) Investments received
without a certified taxpayer identification number will be returned.
You may invest in the following ways:
By Mail
Send a completed application and check or money order payable in U.S. dollars to
American Century Investments.
By Wire
You may make your initial investment by wiring funds. To do so, call us or mail
a completed application and provide your bank with the following information:
o Receiving bank and routing number:
Commerce Bank, N.A. (101000019)
o Beneficiary (BNF):
American Century Services Corporation
4500 Main St., Kansas City, Missouri 64111
o Beneficiary account number (BNF ACCT):
2804918
o Reference for Beneficiary (RFB):
American Century account number into which you are investing. If more
than one, leave blank and see Bank to Bank Information below.
o Originator to Beneficiary (OBI):
Name and address of owner of account into which you are investing.
o Bank to Bank Information
(BBI or Free Form Text):
o Taxpayer identification or Social Security number.
o If more than one account, account numbers and amount to be invested in
each account.
o Current tax year, previous tax year or rollover designation if an IRA.
Specify whether traditional IRA, Roth IRA, Education IRA, SEP-IRA,
SARSEP-IRA, SIMPLE Employer or SIMPLE Employee.
By Exchange
Call 1-800-345-3533 from 7 a.m. to 7 p.m. Central time to get information on
opening an account by exchanging from another American Century account. See this
page for more information on exchanges.
In Person
If you prefer to work with a representative in person, please visit one of our
Investor Centers, located at:
4500 Main Street
Kansas City, Missouri 64111
4917 Town Center Drive
Leawood, Kansas 66211
1665 Charleston Road
Mountain View, California 94043
2000 S. Colorado Blvd.
Denver, Colorado 80222
SUBSEQUENT INVESTMENTS
Subsequent investments may be made by an automatic bank, payroll or government
direct deposit (see "Automatic Investment Plan," this page) or by any of the
methods below. The minimum investment requirement for subsequent investments is
$250 for checks submitted without the investment slip portion of a previous
statement or confirmation and $50 for all other types of subsequent investments.
By Mail
When making subsequent investments, enclose your check with the investment slip
portion of a previous statement or confirmation. If the investment slip is not
available, indicate your name, address and account number on your check or a
separate piece of paper. (Please be aware that the investment minimum for
subsequent investments is higher without an investment slip.)
By Telephone
Once your account is open, you may make investments by telephone if you have
authorized us (by choosing "Full Services" on your application) to draw on your
bank account. You may call an Institutional Service Representative or use our
Automated Information Line.
By Wire
You may make subsequent investments by wire. Follow the wire transfer
instructions on page xx and indicate your account number.
In Person
You may make subsequent investments in person at one of our Investor Centers.
The locations of our Investor Centers are listed on this page.
AUTOMATIC INVESTMENT PLAN
You may elect on your application to make investments automatically by
authorizing us to draw on your bank account regularly. Such investments must be
at least the equivalent of $50 per month. You also may choose an automatic
payroll or government direct deposit. If you are establishing a new account,
check the appropriate box under "Automatic Investments" on your application to
receive more information. If you would like to add a direct deposit to an
existing account, please call an Institutional Service Representative.
MINIMUM INVESTMENT
The minimum investment is $5 million ($3 million for endowments and
foundations). If you invest with us through a bank, broker-dealer or other
financial intermediary, the minimum investment requirement may be met by
aggregating the investments of various clients of your financial intermediary.
The minimum investment requirement may be waived if you or your financial
intermediary, if applicable, has an aggregate investment in our family of funds
of $10 million or more ($5 million for endowments and foundations). If your
balance or the balance of your financial intermediary, if applicable, falls
below the minimum investment requirements due to redemptions or exchanges, we
reserve the right to convert your shares to Investor Class shares of the same
fund. The Investor Class shares have a unified management fee that is 0.20%
higher than the Institutional Class shares.
HOW TO EXCHANGE FROM ONE ACCOUNT TO ANOTHER
As long as you meet any minimum investment requirements, you may exchange your
fund shares to our other funds up to six times per year per account. An exchange
request will be processed as of the same day it is received, if it is received
before the fund's net asset values are calculated, which is one hour prior to
the close of the New York Stock Exchange for funds issued by American Century
Target Maturities Trust and at the close of the Exchange for all of our other
funds. See "When Share Price is Determined," page 23.
For any single exchange, the shares of each fund being acquired must have a
value of at least $100. However, we will allow investors to set up an Automatic
Exchange Plan between any two funds in the amount of at least $50 per month. See
our Investor Services Guide for further information about exchanges.
By Mail
You may direct us in writing to exchange your shares from one American Century
account to another. For additional information, please see our Investor Services
Guide.
By Telephone
You can make exchanges over the telephone if you have authorized us to accept
telephone instructions. You can authorize this by selecting "Full Services" on
your application or by calling us at 1-800-345-3533 to get the appropriate form.
HOW TO REDEEM SHARES
We will redeem or "buy back" your shares at any time. Redemptions will be made
at the next net asset value determined after a complete redemption request is
received.
Please note that a request to redeem shares in an IRA or 403(b) plan must be
accompanied by an executed IRS Form W4-P and a reason for withdrawal as
specified by the IRS.
By Mail
Your written instructions to redeem shares may be made either by a redemption
form, which we will send you upon request, or by a letter to us. Certain
redemptions may require a signature guarantee. Please see "Signature Guarantee,"
page xx.
By Telephone
If you have authorized us to accept telephone instructions, you may redeem your
shares by calling an Institutional Service Representative.
By Check-A-Month
You may redeem shares by Check-A-Month. A Check-A-Month plan automatically
redeems enough shares each month to provide you with a check in an amount you
choose (minimum $50). To set up a Check-A-Month plan, please call and request
our Check-A-Month brochure.
Other Automatic Redemptions
You may elect to make redemptions automatically by authorizing us to send funds
to you or to your account at a bank or other financial institution. To set up
automatic redemptions, call an Institutional Service Representative.
REDEMPTION PROCEEDS
Please note that shortly after a purchase of shares is made by check or
electronic draft (also known as an ACH draft) from your bank, we may wait up to
15 days or longer to send redemption proceeds (to allow your purchase funds to
clear). No interest is paid on the redemption proceeds after the redemption is
processed but before your redemption proceeds are sent.
Redemption proceeds may be sent to you in one of the following ways:
By Check
Ordinarily, all redemption checks will be made payable to the registered owner
of the shares and will be mailed only to the address of record. For more
information, please refer to our Investor Services Guide.
By Wire and ACH
You may authorize us to transmit redemption proceeds by wire or ACH. These
services will be effective 15 days after we receive the authorization.
Your bank will usually receive wired funds within 48 hours of transmission.
Funds transferred by ACH may be received up to seven days after transmission.
Once the funds are transmitted, the time of receipt and the funds' availability
are not under our control.
SIGNATURE GUARANTEE
To protect your accounts from fraud, some transactions will require a signature
guarantee. Which transactions will require a signature guarantee will depend on
which service options you elect when you open your account. For example, if you
choose "In Writing Only," a signature guarantee is required when:
o redeeming more than $25,000; or
o establishing or increasing a Check-A-Month or automatic
transfer on an existing account.
You can obtain a signature guarantee from a bank or trust company, credit union,
broker-dealer, securities exchange or association, clearing agency or savings
association, as defined by federal law.
For a more in-depth explanation of our signature guarantee policy, or if you
live outside the United States and would like to know how to obtain a signature
guarantee, please consult our Investor Services Guide.
We reserve the right to require a signature guarantee on any transaction, or to
change this policy at any time.
SPECIAL SHAREHOLDER SERVICES
We offer several service options to make your account easier to manage. These
are listed on the account application. Please make note of these options and
elect the ones that are appropriate for you. Be aware that the "Full Services"
option offers you the most flexibility. You will find more information about
each of these service options in our Investor Services Guide.
Our special shareholder services include:
Open Order Service
Through our open order service, you may designate a price at which to buy shares
of a variable-priced fund by exchange from one of our money market funds, or a
price at which to sell shares of a variable-priced fund by exchange to one of
our money market funds. The designated purchase price must be equal to or lower,
or the designated sale price equal to or higher, than the variable-priced fund's
net asset value at the time the order is placed. If the designated price is met
within 90 calendar days, we will execute your exchange order automatically at
that price (or better). Open orders not executed within 90 days will be
canceled.
If the fund you have selected deducts a distribution from its share price, your
order price will be adjusted accordingly so the distribution does not
inadvertently trigger an open order transaction on your behalf. If you close or
re-register the account from which the shares are to be redeemed, your open
order will be canceled.
Because of their time-sensitive nature, open order transactions are accepted
only by telephone or in person. These transactions are subject to exchange
limitations described in each fund's prospectus, except that orders and
cancellations received before 2 p.m. Central time are effective the same day,
and orders or cancellations received after 2 p.m. Central time are effective the
next business day.
Tax-Qualified Retirement Plans
The fund is available for your tax-deferred retirement plan. Call or write us
and request the appropriate forms for:
o Individual Retirement Accounts (IRAs);
o 403(b)plans for employees of public school systems and non-profit
organizations; or
o Profit sharing plans and pension plans for corporations and other
employers.
If your IRA and 403(b) accounts do not total $10,000, each account is subject to
an annual $10 fee, up to a total of $30 per year.
You can also transfer your tax-deferred plan to us from another company or
custodian. Call or write us for a Request to Transfer form.
IMPORTANT POLICIES REGARDING YOUR INVESTMENTS
Every account is subject to policies that could affect your investment. Please
refer to the Investor Services Guide for further information about the policies
discussed below, as well as further detail about the services we offer.
(1) We reserve the right for any reason to suspend the offering of shares
for a period of time, or to reject any specific purchase order (including
purchases by exchange). Additionally, purchases may be refused if, in the
opinion of the manager, they are of a size that would disrupt the management of
the fund.
(2) We reserve the right to make changes to any stated investment
requirements, including those that relate to purchases, transfers and
redemptions. In addition, we also may alter, add to or terminate any investor
services and privileges. Any changes may affect all shareholders or only certain
series or classes of shareholders.
(3) Shares being acquired must be qualified for sale in your state of
residence.
(4) Transactions requesting a specific price and date, other than open
orders, will be refused. Once you have mailed or otherwise transmitted your
transaction instructions to us, they may not be modified or canceled.
(5) If a transaction request is made by a corporation, partnership, trust,
fiduciary, agent or unincorporated association, we will require evidence
satisfactory to us of the authority of the individual making the request.
(6) We have established procedures designed to assure the authenticity of
instructions received by telephone. These procedures include requesting personal
identification from callers, recording telephone calls, and providing written
confirmations of telephone transactions. These procedures are designed to
protect shareholders from unauthorized or fraudulent instructions. If we do not
employ reasonable procedures to confirm the genuineness of instructions, then we
may be liable for losses due to unauthorized or fraudulent instructions. The
company, its transfer agent and manager will not be responsible for any loss due
to instructions they reasonably believe are genuine.
(7) All signatures should be exactly as the name appears in the
registration. If the owner's name appears in the registration as Mary Elizabeth
Jones, she should sign that way and not as Mary E. Jones.
(8) Unusual stock market conditions have in the past resulted in an
increase in the number of shareholder telephone calls. If you experience
difficulty in reaching us during such periods, you may send your transaction
instructions by mail, express mail or courier service, or you may visit one of
our Investor Centers. You also may use our Automated Information Line if you
have requested and received an access code and are not attempting to redeem
shares.
(9) If you fail to provide us with the correct certified taxpayer
identification number, we may reduce any redemption proceeds by $50 to cover the
penalty the IRS will impose on us for failure to report your correct taxpayer
identification number on information reports.
(10) We will perform special inquiries on shareholder accounts. A research
fee of $15 per hour may be applied.
REPORTS TO SHAREHOLDERS
At the end of each calendar quarter, we will send you a consolidated statement
that summarizes all of your American Century holdings, as well as an individual
statement for each fund you own that reflects all year-to-date activity in your
account. You may request a statement of your account activity at any time.
With the exception of most automatic transactions, each time you invest, redeem,
transfer or exchange shares, we will send you a confirmation of the transaction.
See the Investor Services Guide for more detail.
CAREFULLY REVIEW ALL THE INFORMATION RELATING TO TRANSACTIONS ON YOUR STATEMENTS
AND CONFIRMATIONS TO ENSURE THAT YOUR INSTRUCTIONS WERE ACTED ON PROPERLY.
PLEASE NOTIFY US IMMEDIATELY IN WRITING IF THERE IS AN ERROR. IF YOU FAIL TO
PROVIDE NOTIFICATION OF AN ERROR WITH REASONABLE PROMPTNESS, I.E., WITHIN 30
DAYS OF NON-AUTOMATIC TRANSACTIONS OR WITHIN 30 DAYS OF THE DATE OF YOUR
CONSOLIDATED QUARTERLY STATEMENT, IN THE CASE OF AUTOMATIC TRANSACTIONS, WE WILL
DEEM YOU TO HAVE RATIFIED THE TRANSACTION.
No later than January 31 of each year, we will send you reports that you may use
in completing your U.S. income tax return. See the Investor Services Guide for
more information.
Each year, we will send you an annual and a semiannual report relating to your
fund, each of which is incorporated herein by reference. The annual report
includes audited financial statements and a list of portfolio securities as of
the fiscal year end. The semiannual report includes unaudited financial
statements for the first six months of the fiscal year, as well as a list of
portfolio securities at the end of the period. You also will receive an updated
prospectus at least once each year. Please read these materials carefully, as
they will help you understand your fund.
CUSTOMERS OF BANKS, BROKER-DEALERS AND OTHER FINANCIAL INTERMEDIARIES
Information contained in our Investor Services Guide pertains to shareholders
who invest directly with American Century rather than through a bank,
broker-dealer or other financial intermediary.
If you own or are considering purchasing fund shares through a bank,
broker-dealer, or other financial intermediary, your ability to purchase,
exchange and redeem shares will depend on your agreement with, and the policies
of, such financial intermediary.
You may reach one of our Institutional Service Representatives by calling
1-800-345-3533 to request information about our funds and services, to obtain a
current prospectus or to get answers to any questions about our funds that you
are unable to obtain through your financial intermediary.
ADDITIONAL INFORMATION YOU SHOULD KNOW
SHARE PRICE
WHEN SHARE PRICE IS DETERMINED
The price of your shares is also referred to as their net asset value. Net asset
value is determined by calculating the total value of a fund's assets, deducting
total liabilities and dividing the result by the number of shares outstanding.
For all American Century funds, except funds issued by American Century Target
Maturities Trust, net asset value is determined as of the close of regular
trading on each day that the New York Stock Exchange is open, usually 3 p.m.
Central time. The net asset values for Target Maturities funds are determined
one hour prior to the close of the Exchange.
Investments and requests to redeem or exchange shares will receive the share
price next determined after receipt by us of the investment, redemption or
exchange request. For example, investments and requests to redeem or exchange
shares received by us or one of our agents or designees before the time as of
which the net asset value of the fund is determined, are effective on, and will
receive the price determined, that day. Investment, redemption and exchange
requests received thereafter are effective on, and receive the price determined
as of, the close of the Exchange on the next day the Exchange is open.
Investments are considered received only when payment is received by us. Wired
funds are considered received on the day they are deposited in our bank account
if they are deposited before the time as of which the net asset value of the
fund is determined.
Investments by telephone pursuant to your prior authorization to us to draw on
your bank account are considered received at the time of your telephone call.
Investment and transaction instructions received by us on any business day by
mail prior to the time as of which the net asset value of the fund is
determined, will receive that day's price. Investments and instructions received
after that time will receive the price determined on the next business day.
If you invest in fund shares through an employer-sponsored retirement plan or
other financial intermediary, it is the responsibility of your plan recordkeeper
or financial intermediary to transmit your purchase, exchange and redemption
requests to the funds' transfer agent prior to the applicable cut-off time for
receiving orders and to make payment for any purchase transactions in accordance
with the funds' procedures or any contractual arrangements with the funds or the
funds' distributor in order for you to receive that day's price.
We have contractual relationships with certain financial intermediaries in which
such intermediaries represent that they have systems to track the time at which
investment orders are received and to segregate orders received at different
times. Based on these representations, the fund has authorized such
intermediaries and their designees to accept purchase and redemption orders on
the fund's behalf up to the applicable cut-off time. The fund will be deemed to
have received such orders upon acceptance by the duly authorized intermediary,
and such orders will be priced at the fund's net asset value next determined
after acceptance on the fund's behalf by such intermediary.
HOW SHARE PRICE IS DETERMINED
The valuation of assets for determining net asset value may be summarized as
follows:
The portfolio securities of the fund, except as otherwise noted, listed or
traded on a domestic securities exchange are valued at the last sale price on
that exchange. Portfolio securities primarily traded on foreign securities
exchanges generally are valued at the preceding closing values of such
securities on the exchange where primarily traded. If no sale is reported, or if
local convention or regulation so provides, the mean of the latest bid and asked
prices is used. Depending on local convention or regulation, securities traded
over-the-counter are priced at the mean of the latest bid and asked prices, or
at the last sale price. When market quotations are not readily available,
securities and other assets are valued at fair value as determined in accordance
with procedures adopted by the Board of Directors.
Debt securities not traded on a principal securities exchange are valued through
valuations obtained from a commercial pricing service or at the most recent mean
of the bid and asked prices provided by investment dealers in accordance with
procedures established by the Board of Directors.
The value of an exchange-traded foreign security is determined in its national
currency as of the close of trading on the foreign exchange on which it is
traded or as of the close of business on the New York Stock Exchange, if that is
earlier. That value is then converted to dollars at the prevailing foreign
exchange rate.
Trading in securities on European and Far Eastern securities exchanges and
over-the-counter markets is normally completed at various times before the close
of business on each day that the New York Stock Exchange is open. If an event
were to occur after the value of a security was established but before the net
asset value per share was determined that was likely to materially change the
net asset value, then that security would be valued at fair value as determined
in accordance with procedures adopted by the Board of Directors.
Trading of these securities in foreign markets may not take place on every New
York Stock Exchange business day. In addition, trading may take place in various
foreign markets on Saturdays or on other days when the New York Stock Exchange
is not open and on which a fund's net asset value is not calculated. Therefore,
such calculation does not take place contemporaneously with the determination of
the prices of many of the portfolio securities used in such calculation and the
value of a fund's portfolio may be affected on days when shares of the fund may
not be purchased or redeemed.
WHERE TO FIND INFORMATION ABOUT SHARE PRICE
The net asset values of the Investor Class are published in leading newspapers
daily. The net asset value of the Institutional Class of each fund may be
obtained by calling us.
DISTRIBUTIONS
Small Cap Quantitative's dividends are declared and paid quarterly in March,
June, September and December.
The objective of Small Cap Quantitative is capital appreciation and not the
production of distributions. You are encouraged to measure the success of your
investment by the value of your investment at any given time and not by the
distributions you receive.
You will begin to participate in the distributions the day after your purchase
is effective. See "WHEN SHARE PRICE IS DETERMINED," page xx. If you redeem
shares, you will receive the distribution declared for the day of the
redemption. If all shares are redeemed, the distribution on the redeemed shares
will be included with your redemption proceeds.
Distributions from net realized securities gains, if any, generally are declared
and paid once a year, but the fund may make distributions on a more frequent
basis to comply with the distribution requirements of the Internal Revenue Code,
in all events in a manner consistent with the provisions of the Investment
Company Act.
Participants in employer-sponsored retirement or savings plans must reinvest all
distributions. For shareholders investing through taxable accounts,
distributions will be reinvested unless you elect to receive them in cash.
Distributions of less than $10 generally will be reinvested. Distributions made
shortly after a purchase by check or ACH may be held up to 15 days. You may
elect to have distributions on shares held in certain IRAs and 403(b) plans paid
in cash only if you are at least 591/2 years old or permanently and totally
disabled. Distribution checks normally are mailed within seven days after the
record date. Please consult our Investor Services Guide for further information
regarding your distribution options.
A distribution on shares of a fund does not increase the value of your shares or
your total return. At any given time the value of your shares includes the
undistributed net gains, if any, realized by the fund on the sale of portfolio
securities, and undistributed dividends and interest received, less fund
expenses.
Because such gains and dividends are included in the price of your shares, when
they are distributed the price of your shares is reduced by the amount of the
distribution. If you buy your shares through a taxable account just before the
distribution, you will pay the full price for your shares, and then receive a
portion of the purchase price back as a taxable distribution. See "Taxes," this
page.
TAXES
The fund has elected to be taxed under Subchapter M of the Internal Revenue
Code, which means that to the extent its income is distributed to shareholders,
it pays no income tax.
TAX-DEFERRED ACCOUNTS
If fund shares are purchased through tax-deferred accounts, such as a qualified
employer-sponsored retirement or savings plan, income and capital gains
distributions paid by the fund will generally not be subject to current
taxation, but will accumulate in your account under the plan on a tax-deferred
basis.
Employer-sponsored retirement and savings plans are governed by complex tax
rules. If you elect to participate in your employer's plan, consult your plan
administrator, your plan's summary plan description, or a professional tax
advisor regarding the tax consequences of participation in the plan,
contributions to, and withdrawals or distributions from the plan.
TAXABLE ACCOUNTS
If fund shares are purchased through taxable accounts, distributions of net
investment income and net short-term capital gains are taxable to you as
ordinary income, except as described below. The dividends from net income may
qualify for the 70% dividends received deduction for corporations to the extent
that the fund held shares receiving the dividend for more than 45 days.
Distributions from gains on assets held longer than 12 months but no more than
18 months (28% rate gain) and/or assets held longer than 18 months (20% rate
gain) are taxable as long-term gains regardless of the length of time you have
held the shares. However, you should note that any loss realized upon the sale
or redemption of shares held for six months or less will be treated as a
long-term capital loss to the extent of any distribution of long-term capital
gain (28% or 20% rate gain) to you with respect to such shares.
Distributions are taxable to you regardless of whether they are taken in cash or
reinvested, even if the value of your shares is below your cost. If you purchase
shares shortly before a distribution, you must pay income taxes on the
distribution, even though the value of your investment (plus cash received, if
any) will not have increased. In addition, the share price at the time you
purchase shares may include unrealized gains in the securities held in the
investment portfolio of the fund. If these portfolio securities are subsequently
sold and the gains are realized, they will, to the extent not offset by capital
losses, be paid to you as a distribution of capital gains and will be taxable to
you as short-term or long-term capital gains (28% and/or 20% rate gain).
In January of the year following the distribution, if you own shares in a
taxable account, you will receive a Form 1099-DIV notifying you of the status of
your distributions for federal income tax purposes.
Distributions also may be subject to state and local taxes, even if all or a
substantial part of such distributions are derived from interest on U.S.
government obligations which, if you received them directly, would be exempt
from state income tax. However, most but not all states allow this tax exemption
to pass through to fund shareholders when a fund pays distributions to its
shareholders. You should consult your tax advisor about the tax status of such
distributions in your own state.
If you have not complied with certain provisions of the Internal Revenue Code
and Regulations, we are required by federal law to withhold and remit to the IRS
31% of reportable payments (which may include dividends, capital gains
distributions and redemptions). Those regulations require you to certify that
the Social Security number or tax identification number you provide is correct
and that you are not subject to 31% withholding for previous under-reporting to
the IRS. You will be asked to make the appropriate certification on your
application. Payments reported by us that omit your Social Security number or
tax identification number will subject us to a penalty of $50, which will be
charged against your account if you fail to provide the certification by the
time the report is filed. This charge is not refundable.
Redemption of shares of a fund (including redemptions made in an exchange
transaction) will be a taxable transaction for federal income tax purposes and
shareholders generally will recognize a gain or loss in an amount equal to the
difference between the basis of the shares and the amount received. Assuming
that shareholders hold such shares as a capital asset, the gain or loss will be
a capital gain or loss and generally will be considered long-term, subject to
tax at a maximum rate of 28% if shareholders have held such shares for a period
of more than 12 months but no more than 18 months and long-term, subject to tax
at a maximum rate of 20% if shareholders have held such shares for a period of
more than 18 months. If a loss is realized on the redemption of fund shares, the
reinvestment in additional fund shares within 30 days before or after the
redemption may be subject to the "wash sale" rules of the Internal Revenue Code,
resulting in a postponement of the recognition of such loss for federal income
tax purposes.
In addition to the federal income tax consequences described above relating to
an investment in a fund, there may be other federal, state or local tax
considerations that depend upon the circumstances of each particular investor.
Prospective shareholders are therefore urged to consult their tax advisors with
respect to the effect of this investment on their own specific situations.
MANAGEMENT
INVESTMENT MANAGEMENT
The fund is a diversified, open-end series of American Century Quantitative
Equity Funds (the company). Under the laws of the State of California, the Board
of Directors is responsible for managing the business and affairs of the
company. Acting pursuant to an investment management agreement entered into with
the fund, American Century Investment Management, Inc. serves as the manager of
the fund. Its principal place of business is American Century Tower, 4500 Main
Street, Kansas City, Missouri 64111. The manager has been providing investment
advisory services to investment companies and institutional clients since it was
founded in 1958.
The manager supervises and manages the investment portfolio of the fund and
directs the purchase and sale of its investment securities. It utilizes a team
of portfolio managers, assistant portfolio managers and analysts acting together
to manage the assets of the fund. The team meets regularly to review portfolio
holdings and to discuss purchase and sale activity. The team adjusts holdings in
the fund's portfolio as it deems appropriate in pursuit of the fund's investment
objective. Individual portfolio manager members of the team also may adjust
portfolio holdings of the fund or of sectors of the fund as necessary between
team meetings.
The portfolio manager members of the team managing the fund and their work
experience for the last five years are as follows:
John Schniedwind, Senior Vice President and Group Leader--Quantitative Equity,
joined American Century in 1982, and has been a member of the team that manages
Small Cap Quantitative since its inception..
The activities of the manager are subject only to directions of the fund's Board
of Directors. The manager pays all the expenses of the fund except brokerage,
taxes, interest, fees and expenses of the non-interested person directors
(including counsel fees) and extraordinary expenses.
For the services provided to the fund, the manager receives a monthly fee based
on a percentage of the average net assets of the fund. The annual rate at which
this fee is assessed is determined monthly in a two-step process: First, a fee
rate schedule is applied to the assets of all of the funds in a fund's
investment category which are managed by the manager (the Investment Category
Fee). The three investment categories are: Money Market Funds, Bond Funds and
Equity Funds. Second, a separate fee rate schedule is applied to the assets of
all of the funds managed by the manager (the Complex Fee). The Investment
Category Fee and the Complex Fee are then added to determine the unified
management fee payable by the fund to the manager. Currently, the Investment
Category Fee for the fund is an annual rate of 0.60% of the average net assets
of the fund. The Complex Fee is currently an annual rate of 0.10% of the average
net assets of the fund. Further information about the calculation of the annual
management fee is contained in the Statement of Additional Information.
On the first business day of each month, the fund pays a management fee to the
manager for the previous month at the specified rate. The fee for the previous
month is calculated by multiplying the applicable fee for the fund by the
aggregate average daily closing value of the fund's net assets during the
previous month, and further multiplying that product by a fraction, the
numerator of which is the number of days in the previous month and the
denominator of which is 365 (366 in leap years).
CODE OF ETHICS
The fund and the manager have adopted a Code of Ethics that restricts personal
investing practices by employees of the manager and its affiliates. Among other
provisions, the Code of Ethics requires that employees with access to
information about the purchase or sale of securities in the fund's portfolios
obtain preclearance before executing personal trades. With respect to Portfolio
Managers and other investment personnel, the Code of Ethics prohibits
acquisition of securities in an initial public offering, as well as profits
derived from the purchase and sale of the same security within 60 calendar days.
These provisions are designed to ensure that the interests of fund shareholders
come before the interests of the people who manage those funds.
TRANSFER AND ADMINISTRATIVE SERVICES
American Century Services Corporation, American Century Tower, 4500 Main Street,
Kansas City, Missouri 64111, acts as transfer agent and dividend-paying agent
for the fund. It provides facilities, equipment and personnel to the fund, and
is paid for such services by the manager.
Certain recordkeeping and administrative services that would otherwise be
performed by the transfer agent may be performed by an insurance company or
other entity providing similar services for various retirement plans using
shares of the fund as a funding medium, by broker-dealers and financial advisors
for their customers investing in shares of American Century or by sponsors of
multi mutual fund no- or low-transaction fee programs. The manager or an
affiliate may enter into contracts to pay them for such recordkeeping and
administrative services out of its unified management fee.
Although there is no sales charge levied by the fund, transactions in shares of
the fund may be executed by brokers or investment advisors who charge a
transaction-based fee or other fee for their services. Such charges may vary
among broker-dealers and financial advisors, but in all cases will be retained
by the broker-dealer or financial advisor and not remitted to the fund or the
manager. You should be aware of the fact that these transactions may be made
directly with American Century without incurring such fees.
From time to time, special services may be offered to shareholders who maintain
higher share balances in our family of funds. These services may include the
waiver of minimum investment requirements, expedited confirmation of shareholder
transactions, newsletters and a team of personal representatives. Any expenses
associated with these special services will be paid by the manager or its
affiliates.
The manager and the transfer agent are both wholly owned by American Century
Companies, Inc. (ACC). James E. Stowers Jr., Chairman of the Board of Directors
of ACC, controls ACC by virtue of his ownership of a majority of its common
stock.
Pursuant to a Sub-Administration Agreement with the manager, Funds Distributor
Inc. (FDI) serves as the Co-Administrator for the funds. FDI is responsible for
(i) providing certain officers of the funds and (ii) reviewing and filing
marketing and sales literature on behalf of the funds. The fees and expenses of
FDI are paid by the manager.
DISTRIBUTION OF FUND SHARES
The funds' shares are distributed by FDI, a registered broker-dealer. FDI is a
wholly-owned indirect subsidiary of Boston Institutional Group, Inc. FDI's
principal business address is 60 State Street, Suite 1300, Boston, Massachusetts
02109. The Investor Class of shares does not pay any commissions or sales loads
to the distributor or to any other broker-dealers or financial intermediaries in
connection with the distribution of fund shares.
Investors may open accounts with American Century only through the distributor.
All purchase transactions in the funds offered by this Prospectus are processed
by the transfer agent, which is authorized to accept any instructions relating
to fund accounts. All purchase orders must be accepted by the distributor. All
fees and expenses of FDI in acting as distributor for the funds are paid by the
manager.
FURTHER INFORMATION ABOUT AMERICAN CENTURY
American Century Quantitative Equity Funds is an open-end management investment
company. Its business and affairs are managed by its officers under the
direction of its Board of Directors.
The principal office of the fund is American Century Tower, 4500 Main Street,
P.O. Box 419385, Kansas City, Missouri 64141-6385. All inquiries may be made by
mail to that address, or by telephone to 1-800-345-3533 (international calls:
816-531-5575).
American Century Quantitative Equity Funds issues shares with no par value. Each
series is commonly referred to as a fund. The assets belonging to each series of
shares are held separately by the custodian and in effect each series is a
separate fund.
American Century offers three classes of the fund offered by this Prospectus: an
Investor Class, an Institutional Class and an Advisor Class. The shares offered
by this Prospectus are Institutional Class shares and have no up-front charges,
commissions, or 12b-1 fees.
The Investor Class is primarily made available to retail investors. The Advisor
Class is primarily offered to institutional investors or through institutional
distribution channels, such as employer-sponsored retirement plans or through
banks, broker-dealers, insurance companies or other financial intermediaries.
The other classes have different fees, expenses, and/or minimum investment
requirements than the Institutional Class. The difference in the fee structures
among the classes is the result of their separate arrangements for shareholder
and distribution services and not the result of any difference in amounts
charged by the manager for core investment advisory services. Accordingly, the
core investment advisory expenses do not vary by class. Different fees and
expenses will affect performance. For additional information concerning the
other classes of shares not offered by this Prospectus, call us at
1-800-345-3533 or contact a sales representative or financial intermediary who
offers those classes of shares.
Except as described below, all classes of shares of a fund have identical
voting, dividend, liquidation and other rights, preferences, terms and
conditions. The only differences among the various classes are (a) each class
may be subject to different expenses specific to that class, (b) each class has
a different identifying designation or name, (c) each class has exclusive voting
rights with respect to matters solely affecting such class, (d) each class may
have different exchange privileges, and (e) the Institutional Class may provide
for automatic conversion from that class into shares of the Investor Class of
the same fund.
Each share, irrespective of series or class, is entitled to one vote for each
dollar of net asset value applicable to such share on all questions, except for
those matters that must be voted on separately by the series or class of shares
affected. Matters affecting only one series or class are voted upon only by that
series or class.
Shares have non-cumulative voting rights, which means that the holders of more
than 50% of the votes cast in an election of directors can elect all of the
directors if they choose to do so, and in such event the holders of the
remaining votes will not be able to elect any person or persons to the Board of
Directors.
Unless required by the Investment Company Act, it will not be necessary for the
fund to hold annual meetings of shareholders. As a result, shareholders may not
vote each year on the election of directors or the appointment of auditors.
However, pursuant to the fund's by-laws, the holders of shares representing at
least 10% of the votes entitled to be cast may request the fund to hold a
special meeting of shareholders. We will assist in the communication with other
shareholders.
We reserve the right to change any of our policies, practices and procedures
described in this Prospectus, including the Statement of Additional Information,
without shareholder approval except in those instances where shareholder
approval is expressly required.
P.O. Box 419385
Kansas City, Missouri
64141-6385
Institutional Services:
1-800-345-3533 or 816-531-5575
Telecommunications Device for the Deaf:
1-800-345-1833 or 816-444-3038
Fax: 816-340-4655
www.americancentury.com
<PAGE>
PROSPECTUS
June 30, 1998
American
Century
Group
Small Cap Quantitative
ADVISOR CLASS
American Century Investments
FAMILY OF FUNDS
American Century Investments offers you nearly 70 fund choices covering stocks,
bonds, money markets, specialty investments and blended portfolios. To help you
find the funds that may meet your investment needs, American Century funds have
been divided into three groups based on investment style and objectives. These
groups, which appear below, are designed to help simplify your fund decisions.
AMERICAN CENTURY INVESTMENTS
BENHAM GROUP AMERICAN CENTURY GROUP TWENTIETH CENTURY GROUP
MONEY MARKET FUNDS ASSET ALLOCATION &
GOVERNMENT BOND FUNDS BALANCED FUNDS
DIVERSIFIED BOND FUNDS CONSERVATIVE EQUITY FUNDS GROWTH FUNDS
MUNICIPAL BOND FUNDS SPECIALTY FUNDS INTERNATIONAL FUNDS
Small Cap Quantitative
PROSPECTUS
June 30, 1998
Small Cap Quantitative
ADVISOR CLASS
American Century Quantitative Equity Funds
American Century Quantitative Equity Funds is a part of American Century
Investments, a family of funds that includes nearly 70 no-load and low-load
mutual funds covering a variety of investment opportunities. One of the funds
from our American Century Group of funds is described in this Prospectus. Its
investment objective is listed on page 2 of this Prospectus. The other funds are
described in separate prospectuses.
Each fund's shares offered in this Prospectus (the Advisor Class shares) are
sold at their net asset value with no sales charges or commissions. The Advisor
Class shares are subject to Rule 12b-1 shareholder services and distribution
fees as described in this Prospectus.
The Advisor Class shares are intended for purchase by participants in
employer-sponsored retirement or savings plans and for persons purchasing shares
through broker-dealers, banks, insurance companies and other financial
intermediaries that provide various administrative and distribution services.
This Prospectus gives you information about the fund that you should know before
investing. Please read this Prospectus carefully and retain it for future
reference. Additional information is included in the Statement of Additional
Information dated June 30, 1998, and filed with the Securities and Exchange
Commission. It is incorporated into this Prospectus by reference. To obtain a
copy without charge, call or write:
American Century Investments
4500 Main Street o P.O. Box 419385
Kansas City, Missouri 64141-6385o 1-800-345-3533
International calls: 816-531-5575
Telecommunications Device for the Deaf:
1-800-345-1833o In Missouri: 816-444-3038
www.americancentury.com
Additional information, including this Prospectus and the Statement of
Additional Information, may be obtained by accessing the Web site maintained by
the SEC (www.sec.gov).
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
INVESTMENT OBJECTIVE OF THE FUND
AMERICAN CENTURY SMALL CAP QUANTITATIVE FUND
Small Cap Quantitative seeks long-term capital appreciation by investing
primarily in equity securities of small companies.
There is no assurance that the fund will achieve its investment objective.
NO PERSON IS AUTHORIZED BY THE FUND TO GIVE ANY INFORMATION OR MAKE ANY
REPRESENTATION OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS OR IN OTHER PRINTED
OR WRITTEN MATERIAL ISSUED BY OR ON BEHALF OF THE FUND, AND YOU SHOULD NOT RELY
ON ANY OTHER INFORMATION OR REPRESENTATION.
TABLE OF CONTENTS
Investment Objectives of the Funds ........................................
Transaction and Operating Expense Table ...................................
Performance Information of Other Class ....................................
INFORMATION REGARDING THE FUNDS
Investment Policies of the Funds ..........................................
Income & Growth .......................................................
Equity Growth .........................................................
Risk Factors and Investment Techniques ....................................
Other Investment Practices, Their Characteristics
and Risks .............................................................
Portfolio Turnover ....................................................
Convertible Securities ................................................
Futures Contracts
and Options Thereon .................................................
Short-Term Instruments ................................................
Foreign Securities ....................................................
Securities Lending ....................................................
Other Techniques ......................................................
Performance Advertising ...................................................
HOW TO INVEST WITH AMERICAN CENTURY INVESTMENTS
How to Purchase
and Sell American Century Funds .......................................
How to Exchange from
One American Century Fund to Another ..................................
How to Redeem Shares ......................................................
Telephone Services ........................................................
Investors Line ........................................................
ADDITIONAL INFORMATION YOU SHOULD KNOW
Share Price ...............................................................
When Share Price Is Determined ........................................
How Share Price Is Determined .........................................
Where to Find Information About Share Price ...........................
Distributions .............................................................
Taxes .....................................................................
Tax-Deferred Accounts .................................................
Taxable Accounts ......................................................
Management ................................................................
Investment Management .................................................
Code of Ethics ........................................................
Transfer and Administrative Services ..................................
Distribution of Fund Shares ...............................................
Service and Distribution Fees .........................................
Further Information About American Century ................................
TRANSACTION AND OPERATING EXPENSE TABLE
Small Cap
Quantitative
SHAREHOLDER TRANSACTION EXPENSES:
Maximum Sales Load Imposed on Purchases ........................... none
Maximum Sales Load Imposed on Reinvested Dividends ................ none
Deferred Sales Load ............................................... none
Redemption Fee .................................................... none
Exchange Fe ....................................................... none
ANNUAL FUND OPERATING EXPENSES:
(as a percentage of net assets)
Management Fees(1) ................................................ 0.65%
12b-1 Fees(2) ..................................................... 0.50%
Other Expenses .................................................... 0.01%
Total Fund Operating Expenses ..................................... 1.16%
EXAMPLE
You would pay the following expenses on a 1 year $ 12
$1,000 investment, assuming a 5% annual return and 3 years 37
redemption at the end of each time period: 5 years 64
10 years 141
- ----------
(1) A portion of the management fee may be paid by American Century Investment
Management, Inc. (the manager) to unaffiliated third parties who provide
recordkeeping and administrative services that would otherwise be performed
by an affiliate of the manager. See "Management - Transfer and
Administrative Services," page 21.
(2) The 12b-1 fee is designed to permit investors to purchase Advisor Class
shares through broker-dealers, banks, insurance companies and other
financial intermediaries. A portion of the fee is used to compensate them
for ongoing recordkeeping and administrative services that would otherwise
be performed by an affiliate of the manager, and a portion is used to
compensate them for distribution and other shareholder services. See
"Service and Distribution Fees," page 19.
The purpose of this table is to help you understand the various costs and
expenses that you, as a shareholder, will bear directly or indirectly in
connection with an investment in the class of shares of the fund offered by this
Prospectus. The example set forth above assumes reinvestment of all dividends
and distributions and uses a 5% annual rate of return as required by SEC
regulations.
Neither the 5% rate of return nor the expenses shown above should be considered
indications of past or future returns and expenses. Actual returns and expenses
may be greater or less than those shown.
The shares offered by this Prospectus are Advisor Class shares. The funds offer
two other classes of shares, one of which is primarily made available to retail
investors and one that is primarily made available to institutional investors.
The other classes have different fee structures than the Advisor Class. The
difference in the fee structures among the classes is the result of their
separate arrangements for shareholder and distribution services and not the
result of any difference in amounts charged by the manager for core investment
advisory services. Accordingly, the core investment advisory expenses do not
vary by class. A difference in fees will result in different performance for the
other classes. For additional information about the various classes, see
"Further Information About American Century," page xx.
INFORMATION REGARDING THE FUND
INVESTMENT POLICIES OF THE FUND
The fund has adopted certain investment restrictions that are set forth in the
Statement of Additional Information. Those restrictions, as well as the
investment objective of the fund identified on page 2 of this Prospectus, and
any other investment policies designated as "fundamental" in this Prospectus or
in the Statement of Additional Information, cannot be changed without
shareholder approval. The fund has implemented additional investment policies
and practices to guide its activities in the pursuit of its investment
objective. These policies and practices, which are described throughout this
Prospectus, are not designated as fundamental policies and may be changed
without shareholder approval.
Small Cap Quantitative's investment objective is to seek long-term capital
appreciation by investing primarily in equity securities of small companies.
Small Cap Quantitative is designed for investors whose financial goals include
long-term capital growth.
The fund will invest primarily in common stocks of smaller companies, as
determined by market capitalization. A company shall be considered to have a
smaller market capitalization if, at the time of investment, it has a market
capitalization which is not greater than the market capitalization of the
largest company contained in the S&P Small Cap 600 Index. The S&P Small Cap 600
Index is a stock index that tracks the performance of equity securities of
smaller capitalization companies. As of December 31, 1997, the largest company
contained in the S&P Small-Cap 600 Index had a market capitalization of
approximately $2.7 billion, while the median company contained in the index had
a market capitalization of approximately $499 million.
The manager seeks a total return for Small Cap Quantitative that exceeds the
total return of the S&P 600. Of course, Small Cap Quantitative's total return
may be higher or lower than the S&P 600's return over any period of time.
RISK FACTORS AND INVESTMENT TECHNIQUES
The manager uses quantitative management strategies in pursuit of the fund's
investment objective. Quantitative management combines two investment management
approaches. The first is to rank stocks based on their relative attractiveness.
The attractiveness of a stock is determined analytically by using a computer
model to combine value and growth measures. Examples of value measures include
price to book and price to cash flow ratios while examples of growth measures
include the rate of growth of a company's earnings and changes in analysts'
earnings estimates.
The second approach is to use a technique referred to as portfolio optimization.
Using a computer the manager constructs a portfolio (i.e. company names and
shares held in each) that seeks the optimal tradeoff between the risk of the
portfolio relative to a benchmark (i.e. the S&P 600) and the expected return of
the portfolio as measured by the stock ranking model.
Approximately 65% of the fund's portfolio holdings will be drawn from equity
securities of companies with a market capitalization within the range of those
which make up the S&P 600. In 1997, that capitalization range was $35 million to
$2.7 billion.
The fund's investment approach may cause it to be more heavily invested in some
industries than in others. However, the fund may not invest more than 25% of its
total assets in companies whose principal business activities are in the same
industry. In addition, the fund is a "diversified" investment company as defined
in the Investment Company Act of 1940 (the Investment Company Act). This means
that investments in any single issuer are limited by restrictions in the
Investment Company Act.
The fund may invest in securities or engage in transactions involving
instruments other than equity securities, as discussed in the section titled
"Other Investment Practices, Their Characteristics and Risks," see below.
OTHER INVESTMENT PRACTICES, THEIR
CHARACTERISTICS AND RISKS
For additional information, see "Additional Investment Restrictions" in the
Statement of Additional Information.
PORTFOLIO TURNOVER
Investment decisions to purchase and sell securities are based on the
anticipated contribution of the security in question to the fund's objective.
The manager considers the rate of portfolio turnover when it determines a change
is in order to achieve the objective and, accordingly under normal conditions
the annual portfolio turnover rate is not anticipated to exceed 150%.
The portfolio turnover of the fund may be higher than other mutual funds with
similar investment objectives. Higher turnover would generate correspondingly
greater brokerage commissions that the fund pays directly. Higher portfolio
turnover also may increase the likelihood that the capital gains, if any,
realized and distributed by the fund will include short-term capital gains,
which are taxable as ordinary income. When a security is sold, the manager seeks
whenever possible to minimize the capital gain that would be realized.
CONVERTIBLE SECURITIES
Although the fund's equity investments consist primarily of common stock, the
fund may buy securities convertible into common stock, such as convertible
bonds, convertible preferred stocks, and warrants. The manager may purchase
these securities if it believes that a company's convertible securities are
undervalued in the market.
FUTURES CONTRACTS AND OPTIONS THEREON
The fund may buy or sell futures contracts relating to groups of securities or
indices and write or buy put and call options relating to such futures
contracts.
For options sold, the fund will segregate cash or appropriate liquid assets
including equity securities and debt securities of any grade equal to the value
of securities underlying the option unless the option is otherwise covered.
The fund will deposit cash or appropriate liquid assets in a segregated
custodial account in an amount equal to the fluctuating market value of long
futures contracts it has purchased, less any margin deposited on its long
position. It may hold cash or acquire such debt obligations for the purpose of
making these deposits.
The fund may use futures and options transactions to maintain cash reserves
while remaining fully invested, to facilitate trading, to reduce transaction
costs, or to pursue higher investment returns when a futures contract is priced
more attractively than its underlying security or index.
Futures contracts and options thereon may subject the fund to greater and more
volatile risks than might otherwise be the case. The principal risks related to
the use of such instruments are (1) the offsetting correlation between movements
in the market price of the portfolio investments (held or intended) being hedged
and in the price of the futures contract or option may be imperfect; (2)
possible lack of a liquid secondary market for closing out futures or option
positions; (3) the need of additional portfolio management skills and
techniques; and (4) losses due to unanticipated market price movements. For a
hedge to be completely effective, the price change of the hedging instrument
should equal the price change of the securities being hedged. Such equal price
changes are not always possible because the investment underlying the hedging
instrument may not be the same investment that is being hedged.
The ordinary spreads between prices in the cash and futures markets, due to the
differences in the nature of those markets, are subject to distortion. Due to
the possibility of distortion, a correct forecast of general interest rate
trends by the manager may still not result in a successful transaction. The
manager may be incorrect in its expectations as to the extent of various
interest rate movements or the time span within which the movements take place.
See the Statement of Additional Information for further information about these
instruments and their risks.
SHORT-TERM INSTRUMENTS
For liquidity purposes, the fund may invest in high-quality money market
instruments with remaining maturities of one year or less.
The fund also may enter into repurchase agreements, collateralized by U.S.
government securities, with banks or broker-dealers that are deemed to present
minimal credit risk. Credit risk determinations are made by the manager pursuant
to guidelines established by the Board of Directors. A repurchase agreement
involves the purchase of a security and a simultaneous agreement to sell the
security back to the seller at a higher price. Delays or losses could result if
the party to the agreement defaults or becomes bankrupt.
The fund may invest up to 5% of its total assets in any money market fund
advised by the manager, provided that the investment is consistent with the
fund's investment policies and restrictions.
FOREIGN SECURITIES
The fund may invest in securities of foreign issuers, including instruments that
trade on domestic or foreign securities exchanges in U.S. dollars or foreign
currencies. Securities of foreign issuers may be affected by the strength of
foreign currencies relative to the U.S. dollar or by political or economic
developments in foreign countries. Foreign companies may not be subject to
accounting standards or governmental regulations comparable to those that affect
U.S. companies, and there may be less public information about their operations.
OTHER TECHNIQUES
The manager may buy other types of securities or employ other portfolio
management techniques on behalf of a fund including reverse repurchase
agreements. When SEC guidelines require it to do so, the fund will set aside
cash or appropriate liquid assets in a segregated account to cover the fund's
obligations.
PERFORMANCE ADVERTISING
From time to time, the fund may advertise performance data. Fund performance may
be shown by presenting one or more performance measurements, including
cumulative total return or average annual total return and yield. Performance
data may be quoted separately for the Investor Class and for the other classes.
Cumulative total return data is computed by considering all elements of return,
including reinvestment of dividends and capital gains distributions, over a
stated period of time. Average annual total return is determined by computing
the annual compound return over a stated period of time that would have produced
the fund's cumulative total return over the same period if the fund's
performance had remained constant throughout.
A quotation of yield reflects a fund's income over a stated period of time
expressed as a percentage of the fund's share price. The effective yield is
calculated in a similar manner, but when annualized, the income earned by the
investment is assumed to be reinvested. The effective yield will be slightly
higher than the yield because of the compounding effect on the assumed
reinvestment.
Yield is calculated by adding over a 30-day (or one-month) period all interest
and dividend income (net of fund expenses) calculated on each day's market
values, dividing this sum by the average number of fund shares outstanding
during the period, and expressing the result as a percentage of the fund's share
price on the last day of the 30-day (or one-month) period. The percentage is
then annualized. Capital gains and losses are not included in the calculation.
Yields are calculated according to accounting methods that are standardized in
accordance with SEC rules for all stock and bond funds. Because yield accounting
methods differ from the methods used for other accounting purposes, a fund's
yield may not equal the income paid on its shares or the income reported in the
fund's financial statements.
The fund also may include in advertisements data comparing performance with the
performance of non-related investment media, published editorial comments and
performance rankings compiled by independent organizations (such as Lipper
Analytical Services, Inc.) and publications that monitor the performance of
mutual funds. Performance information may be quoted numerically or may be
presented in a table, graph or other illustration. In addition, fund performance
may be compared to well-known indices of market performance. Fund performance
also may be compared, on a relative basis, to other funds in our fund family.
This relative comparison, which may be based upon historical fund performance or
historical or expected volatility or other fund characteristics, may be
presented numerically, graphically or in text. Fund performance also may be
combined or blended with other funds in our fund family, and that combined or
blended performance may be compared to the same indices to which individual
funds may be compared.
All performance information advertised by the fund is historical in nature and
is not intended to represent or guarantee future results. The value of fund
shares when redeemed may be more or less than their original cost.
HOW TO INVEST WITH AMERICAN CENTURY INVESTMENTS
The following sections explain how to purchase, exchange and redeem Advisor
Class shares of the funds offered by this Prospectus.
HOW TO PURCHASE AND SELL AMERICAN CENTURY FUNDS
The fund offered by this Prospectus is available as an investment option under
your employer-sponsored retirement or savings plan or through or in connection
with a program, product or service offered by a financial intermediary, such as
a bank, broker-dealer or insurance company. Because all records of your share
ownership are maintained by your plan sponsor, plan recordkeeper, or other
financial intermediary, all orders to purchase, exchange and redeem shares must
be made through your employer or other financial intermediary, as applicable.
If you are purchasing through a retirement or savings plan, the administrator of
your plan or your employee benefits office can provide you with information on
how to participate in your plan and how to select American Century funds as an
investment option.
If you are purchasing through a financial intermediary, you should contact your
service representative at the financial intermediary for information about how
to select American Century funds.
If you have questions about the fund, see "Investment Policies of the Funds,"
page xx, or call one of our Institutional Service Representatives at
1-800-345-3533.
Orders to purchase shares are effective on the day we receive payment. See "When
Share Price is Determined," page xx
We may discontinue offering shares generally in the fund (including any class of
shares of the fund) or in any particular state without notice to shareholders.
To reduce expenses and demonstrate respect for our environment, we have
initiated a project through which we will eliminate duplicate copies of most
financial reports and prospectuses to most households and deliver account
statements to most households in a single envelope, even if they have more than
one account. If you would like additional copies of financial reports and
prospectuses or separate mailing of account statements, please call us.
HOW TO EXCHANGE FROM ONE AMERICAN CENTURY FUND TO ANOTHER
Your plan or program may permit you to exchange your investment in the shares of
the fund for shares of another fund in our family. See your plan administrator,
employee benefits office or financial intermediary for details on the rules in
your plan governing exchanges.
HOW TO REDEEM SHARES
Subject to any restrictions imposed by your employer's plan or financial
intermediary's program, you can sell (redeem) your shares at their net asset
value through the plan or financial intermediary. Your plan administrator,
trustee, financial intermediary or other designated person must provide us with
redemption instructions. The shares will be redeemed at the net asset value next
computed after receipt of the instructions in good order. See "When Share Price
Is Determined," page xx. If you have any questions about how to redeem, contact
your plan administrator, employee benefits office, or service representative at
your financial intermediary, as applicable.
TELEPHONE SERVICES
INVESTORS LINE
To request information about our funds and a current prospectus, or get answers
to any questions that you may have about the funds and the services we offer,
call one of our Institutional Service Representatives at 1-800-345-3533.
ADDITIONAL INFORMATION YOU SHOULD KNOW
SHARE PRICE
WHEN SHARE PRICE IS DETERMINED
The price of your shares is also referred to as their net asset value. Net asset
value is determined by calculating the total value of a fund's assets, deducting
total liabilities and dividing the result by the number of shares outstanding.
For all American Century funds, except funds issued by American Century Target
Maturities Trust, net asset value is determined as of the close of regular
trading on each day that the New York Stock Exchange is open, usually 3 p.m.
Central time. The net asset values for Target Maturities funds are determined
one hour prior to the close of the Exchange.
Investments and requests to redeem or exchange shares will receive the share
price next determined after receipt by us of the investment, redemption or
exchange request. For example, investments and requests to redeem or exchange
shares received by us or one of our agents or designees before the time as of
which the net asset value of the fund is determined, are effective on, and will
receive the price determined, that day. Investment, redemption and exchange
requests received thereafter are effective on, and receive the price determined
as of, the close of the Exchange on the next day the Exchange is open.
Investments are considered received only when payment is received by us. Wired
funds are considered received on the day they are deposited in our bank account
if they are deposited before the time as of which the net asset value of the
fund is determined.
Investments by telephone pursuant to your prior authorization to us to draw on
your bank account are considered received at the time of your telephone call.
Investment and transaction instructions received by us on any business day by
mail prior to the time as of which the net asset value of the fund is
determined, will receive that day's price. Investments and instructions received
after that time will receive the price determined on the next business day.
If you invest in fund shares through an employer-sponsored retirement plan or
other financial intermediary, it is the responsibility of your plan recordkeeper
or financial intermediary to transmit your purchase, exchange and redemption
requests to the funds' transfer agent prior to the applicable cut-off time for
receiving orders and to make payment for any purchase transactions in accordance
with the funds' procedures or any contractual arrangements with the funds or the
funds' distributor in order for you to receive that day's price.
We have contractual relationships with certain financial intermediaries in which
such intermediaries represent that they have systems to track the time at which
investment orders are received and to segregate orders received at different
times. Based on these representations, the fund has authorized such
intermediaries and their designees to accept purchase and redemption orders on
the fund's behalf up to the applicable cut-off time. The fund will be deemed to
have received such orders upon acceptance by the duly authorized intermediary,
and such orders will be priced at the fund's net asset value next determined
after acceptance on the fund's behalf by such intermediary.
HOW SHARE PRICE IS DETERMINED
The valuation of assets for determining net asset value may be summarized as
follows:
The portfolio securities of the fund, except as otherwise noted, listed or
traded on a domestic securities exchange are valued at the last sale price on
that exchange. Portfolio securities primarily traded on foreign securities
exchanges generally are valued at the preceding closing values of such
securities on the exchange where primarily traded. If no sale is reported, or if
local convention or regulation so provides, the mean of the latest bid and asked
prices is used. Depending on local convention or regulation, securities traded
over-the-counter are priced at the mean of the latest bid and asked prices, or
at the last sale price. When market quotations are not readily available,
securities and other assets are valued at fair value as determined in accordance
with procedures adopted by the Board of Directors.
Debt securities not traded on a principal securities exchange are valued through
valuations obtained from a commercial pricing service or at the most recent mean
of the bid and asked prices provided by investment dealers in accordance with
procedures established by the Board of Directors.
The value of an exchange-traded foreign security is determined in its national
currency as of the close of trading on the foreign exchange on which it is
traded or as of the close of business on the New York Stock Exchange, if that is
earlier. That value is then converted to dollars at the prevailing foreign
exchange rate.
Trading in securities on European and Far Eastern securities exchanges and
over-the-counter markets is normally completed at various times before the close
of business on each day that the New York Stock Exchange is open. If an event
were to occur after the value of a security was established but before the net
asset value per share was determined that was likely to materially change the
net asset value, then that security would be valued at fair value as determined
in accordance with procedures adopted by the Board of Directors.
Trading of these securities in foreign markets may not take place on every New
York Stock Exchange business day. In addition, trading may take place in various
foreign markets on Saturdays or on other days when the New York Stock Exchange
is not open and on which a fund's net asset value is not calculated. Therefore,
such calculation does not take place contemporaneously with the determination of
the prices of many of the portfolio securities used in such calculation and the
value of a fund's portfolio may be affected on days when shares of the fund may
not be purchased or redeemed.
WHERE TO FIND INFORMATION ABOUT SHARE PRICE
The net asset values of the Investor Class of the funds are published in leading
newspapers daily. Because the total expense ratio for the Advisor Class shares
is 0.25% higher than the Investor Class, their net asset values will be lower
than the Investor Class. The net asset value of the Advisor Class of each fund
may be obtained by calling us.
DISTRIBUTIONS
Small Cap Quantitative's dividends are declared and paid quarterly in March,
June, September and December.
The objective of Small Cap Quantitative is capital appreciation and not the
production of distributions. You are encouraged to measure the success of your
investment by the value of your investment at any given time and not by the
distributions you receive.
You will begin to participate in the distributions the day after your purchase
is effective. See "WHEN SHARE PRICE IS DETERMINED," page xx. If you redeem
shares, you will receive the distribution declared for the day of the
redemption. If all shares are redeemed, the distribution on the redeemed shares
will be included with your redemption proceeds.
Distributions from net realized securities gains, if any, generally are declared
and paid once a year, but the fund may make distributions on a more frequent
basis to comply with the distribution requirements of the Internal Revenue Code,
in all events in a manner consistent with the provisions of the Investment
Company Act.
Participants in employer-sponsored retirement or savings plans must reinvest all
distributions. For shareholders investing through taxable accounts,
distributions will be reinvested unless you elect to receive them in cash.
Distributions of less than $10 generally will be reinvested. Distributions made
shortly after a purchase by check or ACH may be held up to 15 days. You may
elect to have distributions on shares held in certain IRAs and 403(b) plans paid
in cash only if you are at least 591/2 years old or permanently and totally
disabled. Distribution checks normally are mailed within seven days after the
record date. Please consult our Investor Services Guide for further information
regarding your distribution options.
A distribution on shares of a fund does not increase the value of your shares or
your total return. At any given time the value of your shares includes the
undistributed net gains, if any, realized by the fund on the sale of portfolio
securities, and undistributed dividends and interest received, less fund
expenses.
Because such gains and dividends are included in the price of your shares, when
they are distributed the price of your shares is reduced by the amount of the
distribution. If you buy your shares through a taxable account just before the
distribution, you will pay the full price for your shares, and then receive a
portion of the purchase price back as a taxable distribution. See "Taxes," this
page.
TAXES
The fund has elected to be taxed under Subchapter M of the Internal Revenue
Code, which means that to the extent its income is distributed to shareholders,
it pays no income tax.
TAX-DEFERRED ACCOUNTS
If fund shares are purchased through tax-deferred accounts, such as a qualified
employer-sponsored retirement or savings plan, income and capital gains
distributions paid by the fund will generally not be subject to current
taxation, but will accumulate in your account under the plan on a tax-deferred
basis.
Employer-sponsored retirement and savings plans are governed by complex tax
rules. If you elect to participate in your employer's plan, consult your plan
administrator, your plan's summary plan description, or a professional tax
advisor regarding the tax consequences of participation in the plan,
contributions to, and withdrawals or distributions from the plan.
TAXABLE ACCOUNTS
If fund shares are purchased through taxable accounts, distributions of net
investment income and net short-term capital gains are taxable to you as
ordinary income, except as described below. The dividends from net income may
qualify for the 70% dividends received deduction for corporations to the extent
that the fund held shares receiving the dividend for more than 45 days.
Distributions from gains on assets held longer than 12 months but no more than
18 months (28% rate gain) and/or assets held longer than 18 months (20% rate
gain) are taxable as long-term gains regardless of the length of time you have
held the shares. However, you should note that any loss realized upon the sale
or redemption of shares held for six months or less will be treated as a
long-term capital loss to the extent of any distribution of long-term capital
gain (28% or 20% rate gain) to you with respect to such shares.
Distributions are taxable to you regardless of whether they are taken in cash or
reinvested, even if the value of your shares is below your cost. If you purchase
shares shortly before a distribution, you must pay income taxes on the
distribution, even though the value of your investment (plus cash received, if
any) will not have increased. In addition, the share price at the time you
purchase shares may include unrealized gains in the securities held in the
investment portfolio of the fund. If these portfolio securities are subsequently
sold and the gains are realized, they will, to the extent not offset by capital
losses, be paid to you as a distribution of capital gains and will be taxable to
you as short-term or long-term capital gains (28% and/or 20% rate gain).
In January of the year following the distribution, if you own shares in a
taxable account, you will receive a Form 1099-DIV notifying you of the status of
your distributions for federal income tax purposes.
Distributions also may be subject to state and local taxes, even if all or a
substantial part of such distributions are derived from interest on U.S.
government obligations which, if you received them directly, would be exempt
from state income tax. However, most but not all states allow this tax exemption
to pass through to fund shareholders when a fund pays distributions to its
shareholders. You should consult your tax advisor about the tax status of such
distributions in your own state.
If you have not complied with certain provisions of the Internal Revenue Code
and Regulations, we are required by federal law to withhold and remit to the IRS
31% of reportable payments (which may include dividends, capital gains
distributions and redemptions). Those regulations require you to certify that
the Social Security number or tax identification number you provide is correct
and that you are not subject to 31% withholding for previous under-reporting to
the IRS. You will be asked to make the appropriate certification on your
application. Payments reported by us that omit your Social Security number or
tax identification number will subject us to a penalty of $50, which will be
charged against your account if you fail to provide the certification by the
time the report is filed. This charge is not refundable.
Redemption of shares of a fund (including redemptions made in an exchange
transaction) will be a taxable transaction for federal income tax purposes and
shareholders generally will recognize a gain or loss in an amount equal to the
difference between the basis of the shares and the amount received. Assuming
that shareholders hold such shares as a capital asset, the gain or loss will be
a capital gain or loss and generally will be considered long-term, subject to
tax at a maximum rate of 28% if shareholders have held such shares for a period
of more than 12 months but no more than 18 months and long-term, subject to tax
at a maximum rate of 20% if shareholders have held such shares for a period of
more than 18 months. If a loss is realized on the redemption of fund shares, the
reinvestment in additional fund shares within 30 days before or after the
redemption may be subject to the "wash sale" rules of the Internal Revenue Code,
resulting in a postponement of the recognition of such loss for federal income
tax purposes.
In addition to the federal income tax consequences described above relating to
an investment in a fund, there may be other federal, state or local tax
considerations that depend upon the circumstances of each particular investor.
Prospective shareholders are therefore urged to consult their tax advisors with
respect to the effect of this investment on their own specific situations.
MANAGEMENT
INVESTMENT MANAGEMENT
The fund is a diversified, open-end series of American Century Quantitative
Equity Funds (the company). Under the laws of the State of California, the Board
of Directors is responsible for managing the business and affairs of the
company. Acting pursuant to an investment management agreement entered into with
the fund, American Century Investment Management, Inc. serves as the manager of
the fund. Its principal place of business is American Century Tower, 4500 Main
Street, Kansas City, Missouri 64111. The manager has been providing investment
advisory services to investment companies and institutional clients since it was
founded in 1958.
The manager supervises and manages the investment portfolio of the fund and
directs the purchase and sale of its investment securities. It utilizes a team
of portfolio managers, assistant portfolio managers and analysts acting together
to manage the assets of the fund. The team meets regularly to review portfolio
holdings and to discuss purchase and sale activity. The team adjusts holdings in
the fund's portfolio as it deems appropriate in pursuit of the fund's investment
objective. Individual portfolio manager members of the team also may adjust
portfolio holdings of the fund or of sectors of the fund as necessary between
team meetings.
The portfolio manager members of the team managing the fund and their work
experience for the last five years are as follows:.
John Schniedwind, Senior Vice President and Group Leader--Quantitative Equity,
joined American Century in 1982, and has been a member of the team that manages
Small Cap Quantitative since its inception..
The activities of the manager are subject only to directions of the fund's Board
of Directors. The manager pays all the expenses of the fund except brokerage,
taxes, interest, fees and expenses of the non-interested person directors
(including counsel fees) and extraordinary expenses.
For the services provided to the funds, the manager receives a monthly fee based
on a percentage of the average net assets of each fund. The annual rate at which
this fee is assessed is determined monthly in a two-step process: First, a fee
rate schedule is applied to the assets of all of the funds in a fund's
investment category which are managed by the manager (the Investment Category
Fee). The three investment categories are: Money Market Funds, Bond Funds and
Equity Funds. Second, a separate fee rate schedule is applied to the assets of
all of the funds managed by the manager (the Complex Fee). The Investment
Category Fee and the Complex Fee are then added to determine the unified
management fee payable by the fund to the manager. Currently, the Investment
Category Fee for the fund is an annual rate of 0.60% of the average net assets
of the fund. The Complex Fee is currently an annual rate of 0.05% of the average
net assets of the fund. Further information about the calculation of the annual
management fee is contained in the Statement of Additional Information.
On the first business day of each month, the fund pays a management fee to the
manager for the previous month at the specified rate. The fee for the previous
month is calculated by multiplying the applicable fee for the fund by the
aggregate average daily closing value of the fund's net assets during the
previous month, and further multiplying that product by a fraction, the
numerator of which is the number of days in the previous month and the
denominator of which is 365 (366 in leap years).
CODE OF ETHICS
The fund and the manager have adopted a Code of Ethics that restricts personal
investing practices by employees of the manager and its affiliates. Among other
provisions, the Code of Ethics requires that employees with access to
information about the purchase or sale of securities in the fund's portfolios
obtain preclearance before executing personal trades. With respect to Portfolio
Managers and other investment personnel, the Code of Ethics prohibits
acquisition of securities in an initial public offering, as well as profits
derived from the purchase and sale of the same security within 60 calendar days.
These provisions are designed to ensure that the interests of fund shareholders
come before the interests of the people who manage those funds.
TRANSFER AND ADMINISTRATIVE SERVICES
American Century Services Corporation, American Century Tower, 4500 Main Street,
Kansas City, Missouri 64111, acts as transfer agent and dividend-paying agent
for the fund. It provides facilities, equipment and personnel to the fund, and
is paid for such services by the manager.
From time to time, special services may be offered to shareholders who maintain
higher share balances in our family of funds. These services may include the
waiver of minimum investment requirements, expedited confirmation of shareholder
transactions, newsletters and a team of personal representatives. Any expenses
associated with these special services will be paid by the manager or its
affiliates.
The manager and the transfer agent are both wholly owned by American Century
Companies, Inc. (ACC). James E. Stowers Jr., Chairman of the Board of Directors
of ACC, controls ACC by virtue of his ownership of a majority of its common
stock.
Pursuant to a Sub-Administration Agreement with the manager, Funds Distributor
Inc. (FDI) serves as the Co-Administrator for the funds. FDI is responsible for
(i) providing certain officers of the funds and (ii) reviewing and filing
marketing and sales literature on behalf of the funds. The fees and expenses of
FDI are paid by the manager.
DISTRIBUTION OF FUND SHARES
The fund's shares are distributed by FDI, a registered broker-dealer. FDI is a
wholly-owned indirect subsidiary of Boston Institutional Group, Inc. FDI's
principal business address is 60 State Street, Suite 1300, Boston, Massachusetts
02109. As agent for the fund and the manager, the distributor enters into
contracts with various banks, broker-dealers, insurance companies and other
financial intermediaries with respect to the sale of the fund's shares and/or
the use of the fund's shares in various financial services. The manager (or an
affiliate) pays all expenses incurred in promoting sales of, and distributing,
the Advisor Class and in securing such services out of the Rule 12b-1 fees
described in the section that follows.
Investors may open accounts with American Century only through the distributor.
All purchase transactions in the funds offered by this Prospectus are processed
by the transfer agent, which is authorized to accept any instructions relating
to fund accounts. All purchase orders must be accepted by the distributor. All
fees and expenses of FDI in acting as distributor for the fund are paid by the
manager.
SERVICE AND DISTRIBUTION FEES
Rule 12b-1 adopted by the SEC under the Investment Company Act permits
investment companies that adopt a written plan to pay certain expenses
associated with the distribution of their shares. Pursuant to that rule, the
fund's Board of Directors and the initial shareholder of the fund's Advisor
Class shares have approved and entered into a Master Distribution and
Shareholder Services Plan (the Plan) with the distributor. Pursuant to the Plan,
the fund pays a shareholder services fee and a distribution fee, each equal to
0.25% (for a total of 0.50%) per annum of the average daily net assets of the
shares of the fund's Advisor Class. The shareholder services fee is paid for the
purpose of paying the costs of securing certain shareholder and administrative
services, and the distribution fee is paid for the purpose of paying the costs
of providing various distribution services. All or a portion of such fees are
paid by the manager, as paying agent for the fund, to the banks, broker-dealers,
insurance companies or other financial intermediaries through which such shares
are made available.
The Plan has been adopted and will be administered in accordance with the
requirements of Rule 12b-1 under the Investment Company Act. For additional
information about the Plan and its terms, see "Multiple Class Structure - Master
Distribution and Shareholder Services Plan" in the Statement of Additional
Information. Fees paid pursuant to the Plan may be paid for shareholder services
and the maintenance of accounts and therefore may constitute "service fees" for
purposes of applicable rules of the National Association of Securities Dealers.
FURTHER INFORMATION ABOUT AMERICAN CENTURY
American Century Quantitative Equity Funds is an open-end management investment
company. Its business and affairs are managed by its officers under the
direction of its Board of Directors.
The principal office of the fund is American Century Tower, 4500 Main Street,
P.O. Box 419385, Kansas City, Missouri 64141-6385. All inquiries may be made by
mail to that address, or by telephone to 1-800-345-3533 (international calls:
816-531-5575).
American Century Quantitative Equity Funds issues shares with no par value. Each
series is commonly referred to as a fund. The assets belonging to each series of
shares are held separately by the custodian and in effect each series is a
separate fund.
American Century offers three classes of each of the funds offered by this
Prospectus: an Investor Class, an Institutional Class, and an Advisor Class. The
shares offered by this Prospectus are Advisor Class shares.
The Investor Class is primarily made available to retail investors. The
Institutional Class is primarily offered to institutional investors or through
institutional distribution channels, such as employer-sponsored retirement plans
or through banks, broker-dealers, insurance companies or other financial
intermediaries. The other classes have different fees, expenses, and/or minimum
investment requirements than the Advisor Class. The difference in the fee
structures among the classes is the result of their separate arrangements for
shareholder and distribution services and not the result of any difference in
amounts charged by the manager for core investment advisory services.
Accordingly, the core investment advisory expenses do not vary by class.
Different fees and expenses will affect performance. For additional information
concerning the other classes of shares not offered by this Prospectus, call us
at 1-800-345-3533 or contact a sales representative or financial intermediary
who offers those classes of shares.
Except as described below, all classes of shares of a fund have identical
voting, dividend, liquidation and other rights, preferences, terms and
conditions. The only differences among the various classes are (a) each class
may be subject to different expenses specific to that class, (b) each class has
a different identifying designation or name, (c) each class has exclusive voting
rights with respect to matters solely affecting such class, (d) each class may
have different exchange privileges, and (e) the Institutional Class may provide
for automatic conversion from that class into shares of the Investor Class of
the same fund.
Each share, irrespective of series or class, is entitled to one vote for each
dollar of net asset value applicable to such share on all questions, except for
those matters that must be voted on separately by the series or class of shares
affected. Matters affecting only one series or class are voted upon only by that
series or class.
Shares have non-cumulative voting rights, which means that the holders of more
than 50% of the votes cast in an election of directors can elect all of the
directors if they choose to do so, and in such event the holders of the
remaining votes will not be able to elect any person or persons to the Board of
Directors.
Unless required by the Investment Company Act, it will not be necessary for the
fund to hold annual meetings of shareholders. As a result, shareholders may not
vote each year on the election of directors or the appointment of auditors.
However, pursuant to the fund's by-laws, the holders of shares representing at
least 10% of the votes entitled to be cast may request the fund to hold a
special meeting of shareholders. We will assist in the communication with other
shareholders.
We reserve the right to change any of our policies, practices and procedures
described in this Prospectus, including the Statement of Additional Information,
without shareholder approval except in those instances where shareholder
approval is expressly required.
P.O. Box 419385
Kansas City, Missouri
64141-6385
Institutional Services:
1-800-345-3533 or 816-531-5575
Telecommunications Device for the Deaf:
1-800-345-1833 or 816-444-3038
Fax: 816-340-4655
www.americancentury.com
9708
SH-BKT-9207
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
June 30, 1998
AMERICAN
CENTURY
GROUP
Small Cap Quantitative
STATEMENT OF ADDITIONAL INFORMATION
June 30, 1998
AMERICAN CENTURY QUANTITATIVE EQUITY FUNDS
This is the Statement of Additional Information for the American Century Small
Cap Quantitative Fund. This Statement is not a prospectus but should be read in
conjunction with the fund's current Prospectus dated June 30, 1998. Please
retain this document for future reference. To obtain the Prospectus, call
American Century Investments toll free at 1-800-345-2021 (international calls:
816-531-5575), or write P.O. Box 419200, Kansas City, Missouri 64141-6200.
TABLE OF CONTENTS
Investment Policies and Techniques .......
Investment Restrictions ..................
Portfolio Turnover .......................
Performance Advertising...................
Capital Stock ............................
Custodians................................
Independent Auditors......................
Multiple Class Structure .................
Brokerage ................................
Officers and Directors ...................
Management ...............................
Holidays .................................
INVESTMENT POLICIES AND TECHNIQUES
The following pages provide a more detailed description of the securities and
investment practices identified in the Prospectus. Unless otherwise noted, the
policies described in this Statement of Additional Information are not
fundamental and may be changed by the Board of Directors.
U.S. GOVERNMENT SECURITIES
The fund may invest in U.S. government securities, including bills, notes and
bonds issued by the U.S. Treasury and securities issued or guaranteed by
agencies or instrumentalities of the U.S. government. Some U.S. government
securities are supported by the direct full faith and credit pledge of the U.S.
government; others are supported by the right of the issuer to borrow from the
U.S. Treasury; others, such as securities issued by the Federal National
Mortgage Association, are supported by the discretionary authority of the U.S.
government to purchase the agencies' obligations; and others are supported only
by the credit of the issuing or guaranteeing instrumentality. There is no
assurance that the U.S. government will provide financial support to an
instrumentality it sponsors when it is not obligated by law to do so.
REPURCHASE AGREEMENTS
In a repurchase agreement (repo), the fund buys a security at one price and
simultaneously agrees to sell it back to the seller at an agreed upon price on a
specified date (usually within seven days from the date of purchase) or on
demand. The repurchase price exceeds the purchase price by an amount that
reflects an agreed-upon rate of return and that is unrelated to the interest
rate on the underlying security. Delays or losses could result if the other
party to the agreement defaults or becomes bankrupt.
American Century Investment Management, Inc. (the manager) attempts to
minimize the risks associated with repurchase agreements by adhering to written
guidelines which govern repurchase agreements. These guidelines strictly govern
(i) the type of securities which may be acquired and held under repurchase
agreements; (ii) collateral requirements for sellers under repurchase
agreements; (iii) the amount of the fund's net assets that may be committed to
repurchase agreements that mature in more than seven days; and (iv) the manner
in which the fund must take delivery of securities subject to repurchase
agreements. Moreover, the Board of Directors reviews and approves, on a
quarterly basis, the creditworthiness of brokers, dealers and banks with whom
the fund may enter into repurchase agreements. The fund may enter into a
repurchase agreement only with an entity that appears on a list of entities that
have been approved by the Board as sufficiently creditworthy.
The fund has received permission from the Securities and Exchange Commission
(SEC) to participate in joint repurchase agreements collateralized by U.S.
government securities with other mutual fund advised by the manager. Joint repos
are expected to increase the income the fund can earn from repo transactions
without increasing the risks associated with these transactions.
WHEN-ISSUED AND FORWARD COMMITMENT AGREEMENTS
The fund may engage in securities transactions on a when-issued or forward
commitment basis, in which the transaction price and yield are each fixed at the
time the commitment is made, but payment and delivery occur at a future date
(typically 15 to 45 days later).
When purchasing securities on a when-issued or forward commitment basis, the
fund assumes the rights and risks of ownership, including the risks of price and
yield fluctuations. Although the fund will make commitments to purchase or sell
securities on a when-issued or forward commitment basis with the intention of
actually receiving or delivering them, it may sell the securities before the
settlement date if doing so is deemed advisable as a matter of investment
strategy.
In purchasing securities on a when-issued or forward commitment basis, the
fund will establish and maintain until the settlement date a segregated account
consisting of cash or appropriate liquid assets including equity securities and
debt securities of any grade in an amount sufficient to meet the purchase price.
When the time comes to pay for the when-issued securities, the fund will meet
its obligations with available cash, through the sale of securities, or,
although it would not normally expect to do so, by selling the when-issued
securities themselves (which may have a market value greater or less than the
fund's payment obligation). Selling securities to meet when-issued or forward
commitment obligations may generate taxable capital gains or losses.
CONVERTIBLE SECURITIES
The fund may buy securities that are convertible into common stock. Listed
below is a brief description of the various types of convertible securities the
fund may buy.
Convertible bonds are issued with lower coupons than nonconvertible bonds of
the same quality and maturity, but they give holders the option to exchange
their bonds for a specific number of shares of the company's common stock at a
predetermined price. This structure allows the convertible bond holder to
participate in share price movements in the company's common stock. The actual
return on a convertible bond may exceed its stated yield if the company's common
stock appreciates in value and the option to convert to common shares becomes
more valuable.
Convertible preferred stocks are nonvoting equity securities that pay a fixed
dividend. These securities have a convertible feature similar to convertible
bonds; however, they do not have a maturity date. Due to their fixed-income
features, convertible issues typically are more sensitive to interest rate
changes than the underlying common stock. In the event of liquidation,
bondholders would have claims on company assets senior to those of stockholders;
preferred stockholders would have claims senior to those of common stockholders.
Warrants entitle the holder to buy the issuer's stock at a specific price for
a specific period of time. The price of a warrant tends to be more volatile
than, and does not always track, the price of its underlying stock. Warrants are
issued with expiration dates. Once a warrant expires, it has no value in the
market.
FOREIGN SECURITIES
Although the fund may buy securities of foreign issuers in foreign markets,
most of their foreign securities investments are made by purchasing American
Depositary Receipts (ADRs), "ordinary shares," or "New York Shares." The fund
may invest in foreign-currency-denominated securities that trade in foreign
markets if the manager believes that such investments will be advantageous to
the fund.
ADRs are dollar-denominated receipts representing interests in the securities
of a foreign issuer. They are issued by U.S. banks and traded on exchanges or
over the counter in the United States. Ordinary shares are shares of foreign
issuers that are traded abroad and on a U.S. exchange. New York shares are
shares that a foreign issuer has allocated for trading in the United States.
ADRs, ordinary shares, and New York shares all may be purchased with and sold
for U.S. dollars, which protects the fund from the foreign settlement risks
described below.
Investing in foreign companies may involve risks not typically associated with
investing in U.S. companies. The value of securities denominated in foreign
currencies and of dividends from such securities can change significantly when
foreign currencies strengthen or weaken relative to the U.S. dollar. Foreign
securities markets generally have less trading volume and less liquidity than
U.S. markets, and prices in some foreign markets can be very volatile.
Many foreign countries lack uniform accounting and disclosure standards
comparable to those that apply to U.S. companies, and it may be more difficult
to obtain reliable information regarding a foreign issuer's financial condition
and operations. In addition, the costs of foreign investing, including
withholding taxes, brokerage commissions, and custodial fees, are generally
higher than for U.S. investments.
Foreign markets may offer less protection to investors than U.S. markets.
Foreign issuers, brokers, and securities markets may be subject to less
governmental supervision. Foreign security trading practices, including those
involving the release of assets in advance of payment, may involve increased
risks in the event of a failed trade or the insolvency of a broker-dealer and
may involve substantial delays. It may also be difficult to enforce legal rights
in foreign countries.
Investing abroad carries political and economic risks distinct from those
associated with investing in the United States. Foreign investments may be
affected by actions of foreign governments adverse to the interests of U.S.
investors, including the possibility of expropriation or nationalization of
assets, confiscatory taxation, restrictions on U.S. investment, or restrictions
on the ability to repatriate assets or to convert currency into U.S. dollars.
There may be a greater possibility of default by foreign governments or
foreign-government-sponsored enterprises. Investments in foreign countries also
involve a risk of local political, economic, or social instability, military
action or unrest, or adverse diplomatic developments.
FOREIGN CURRENCY EXCHANGE TRANSACTIONS
The manager may engage in foreign currency exchange transactions on behalf of
the fund in order to manage currency risk. Foreign currencies will be purchased
and sold regularly, either in the spot (i.e., cash) market or in the forward
market (through forward foreign currency exchange contracts, or "forward
contracts").
A forward foreign currency exchange contract is an obligation to purchase or
sell a specific currency at a future date, which may be any fixed number of days
agreed upon by the parties, commencing with the date of the contract, at a price
set at the time of the contract. When the fund agrees to buy or sell a security
denominated in a foreign currency, it may enter into a forward contract to "lock
in" the U.S. dollar price of the security. By entering into a forward contract
to buy or sell the amount of foreign currency involved in a security transaction
for a fixed amount of U.S. dollars, the manager can protect the fund against
possible loss resulting from adverse changes in the relationship between the
U.S. dollar and the foreign currency between the date the security is purchased
or sold and the date on which payment is made or received. This type of
transaction is sometimes referred to as a "position hedge."
However, it should be noted that using forward contracts to protect the fund's
foreign investments from currency fluctuations does not eliminate fluctuations
in the prices of the underlying securities themselves. Forward contracts simply
establish a rate of exchange that can be achieved at some future point in time.
Additionally, although forward contracts tend to minimize the risk of loss due
to a decline in the value of the hedged currency, they also limit any gain that
might result if the hedged currency's value increases.
Successful use of forward contracts depends on the manager's skill in
analyzing and predicting currency values. Although they are used for settlement
purposes, forward contracts alter the fund's exposure to currency exchange rate
activity and could result in losses to the fund if currencies do not perform as
the manager anticipates. The fund may also incur significant costs when
converting assets from one currency to another.
Foreign exchange dealers do not charge fees for currency conversions. Instead,
they realize a profit based on the difference (i.e., the spread) between the
prices at which they are buying and selling various currencies. A dealer may
offer to sell a foreign currency at one rate while simultaneously offering a
lesser rate of exchange on the purchase of that currency.
The fund uses forward contracts for currency hedging purposes only and not for
speculative purposes. The fund is not required to enter into forward contracts
with regard to its foreign holdings and will not do so unless it is deemed
appropriate by the manager.
The fund's assets are valued daily in U.S. dollars, although foreign currency
holdings are not physically converted into U.S. dollars on a daily basis.
DEPOSITARY RECEIPTS
American Depositary Receipts and European Depositary Receipts (ADRs and EDRs)
are receipts representing ownership of shares of a foreign-based issuer held in
trust by a bank or similar financial institution. These are designed for U.S.
and European securities markets as alternatives to purchasing underlying
securities in their corresponding national markets and currencies. ADRs and EDRs
can be sponsored or unsponsored.
Sponsored ADRs and EDRs are certificates in which a bank or financial
institution participates with a custodian. Issuers of unsponsored ADRs and EDRs
are not contractually obligated to disclose material information in the United
States. Therefore, there may not be a correlation between such information and
the market value of the unsponsored ADR or EDR.
RESTRICTED SECURITIES
Restricted securities held by the fund generally can be sold in privately
negotiated transactions, pursuant to an exemption from registration under the
Securities Act of 1933, or in a registered public offering. Where registration
is required, the fund may be required to pay all or a part of the registration
expense, and a considerable period may elapse between the time it decides to
seek registration of the securities and the time it is permitted to sell them
under an effective registration statement. If, during this period, adverse
market conditions were to develop, the fund might obtain a less favorable price
than prevailed when it decided to try to register the securities.
SECURITIES LENDING
In order to realize additional income, the fund may lend its portfolio
securities. Such loans may not exceed one-third of the fund's net assets valued
at market except (i) through the purchase of debt securities in accordance with
its investment objective, policies and limitations, or (ii) by engaging in
repurchase agreements with respect to portfolio securities.
PUT OPTIONS ON INDIVIDUAL SECURITIES
The fund may buy puts with respect to stocks underlying its convertible
security holdings. For example, if the manager anticipates a decline in the
price of the stock underlying a convertible security the fund holds, it may
purchase a put option on the stock. If the stock price subsequently declines, an
increase in the value of the put option could be expected to offset all or a
portion of the effect of the stock's decline on the value of the convertible
security.
FUTURES AND OPTIONS TRANSACTIONS
FUTURES TRANSACTIONS. The fund may engage in futures transactions. Such
transactions may be used to maintain cash reserves while remaining fully
invested, to facilitate trading, to reduce transaction costs, or to pursue
higher investment returns when a futures contract is priced more attractively
than its underlying security or index.
Futures contracts provide for the sale by one party and purchase by another
party of a specific security at a specified future time and price. Futures
contracts are traded on national futures exchanges. Futures exchanges and
trading are regulated under the Commodity Exchange Act by the Commodity Futures
Trading Commission (CFTC), a U.S. government agency.
Although futures contracts, by their terms, generally call for actual delivery
or acceptance of the underlying securities, in most cases the contracts are
closed out before the settlement date. Closing out a futures position is done by
taking an opposite position in an identical contract (i.e., buying a contract
that has previously been sold, or selling a contract that has previously been
bought).
To initiate and maintain open positions in futures contracts, the fund is
required to make a good faith margin deposit in cash or appropriate securities
with a broker or custodian. A margin deposit is intended to assure completion of
the contract (delivery or acceptance of the underlying security) if it is not
terminated prior to the specified delivery date. Minimum initial margin
requirements are established by the futures exchanges and may be revised. In
addition, brokers may establish deposit requirements that are higher than the
exchange minimums.
After a futures contract position is opened, the value of the contract is
marked to market daily. If the futures contract price changes to the extent that
the margin on deposit does not satisfy margin requirements, the contract holder
is required to pay an additional "variation" margin. Conversely, changes in the
contract value may reduce the required margin, resulting in a repayment of
excess margin to the contract holder. Variation margin payments are made to or
from the futures broker as long as the contract remains open and do not
constitute margin transactions for purposes of a fund's investment restrictions.
Those who trade futures contracts may be broadly classified as either
"hedgers" or "speculators." Hedgers use the futures markets primarily to offset
unfavorable changes in the value of securities they hold or expect to acquire
for investment purposes. Speculators are less likely to own the securities
underlying the futures contracts they trade and are more likely to use futures
contracts with the expectation of realizing profits from fluctuations in the
prices of the underlying securities. The fund will not utilize futures contracts
for speculative purposes.
Although techniques other than trading futures contracts can be used to
control the fund's exposure to market fluctuations, the use of futures contracts
may be a more effective means of hedging this exposure. While the fund pays
brokerage commissions in connection with opening and closing out futures
positions, these costs are generally lower than the transaction costs incurred
in the purchase and sale of the underlying securities.
PURCHASING PUT AND CALL OPTIONS. By purchasing a put option, the fund obtains
the right (but not the obligation) to sell the option's underlying instrument at
a fixed "strike" price. In return for this right, the fund pays the current
market price for the option (known as the option premium). Options have various
types of underlying instruments, including specific securities, indexes of
securities prices, and futures contracts. The fund may terminate its position in
a put option it has purchased by allowing it to expire or by exercising the
option. If the option is allowed to expire, the fund will lose the entire
premium it paid. If the fund exercises the option, it completes the sale of the
underlying instrument at the strike price. The fund may also terminate a put
option position by closing it out in the secondary market at its current price
if a liquid secondary market exists.
The buyer of a typical put option can expect to realize a gain if security
prices fall substantially. However, if the underlying instrument's price does
not fall enough to offset the cost of purchasing the option, a put buyer can
expect to suffer a loss (limited to the amount of the premium paid, plus related
transaction costs).
The features of call options are essentially the same as those of put options,
except that the purchaser of a call option obtains the right to purchase, rather
than sell, the underlying instrument at the option's strike price. A call buyer
typically attempts to participate in potential price increases of the underlying
instrument with risk limited to the cost of the option if security prices fall.
At the same time, the buyer can expect to suffer a loss if security prices do
not rise sufficiently to offset the cost of the option.
WRITING PUT AND CALL OPTIONS. If the fund writes a put option, it takes the
opposite side of the transaction from the option's purchaser. In return for
receipt of the premium, the fund assumes the obligation to pay the strike price
for the option's underlying instrument if the other party chooses to exercise
the option. When writing an option on a futures contract, the fund will be
required to make margin payments to a broker or custodian as described above for
futures contracts. The fund may seek to terminate its position in a put option
before it is exercised by closing out the option in the secondary market at its
current price. If the secondary market is not liquid for a put option the fund
has written, however, the fund must continue to be prepared to pay the strike
price while the option is outstanding, regardless of price changes, and must
continue to set aside assets to cover its position.
If security prices rise, a put writer would generally expect to profit,
although the gain would be limited to the amount of the premium received. If
security prices remain the same over time, it is likely that the writer also
will profit by being able to close out the option at a lower price. If security
prices fall, the put writer would expect to suffer a loss. This loss should be
less than the loss from purchasing the underlying instrument directly, however,
because the premium received for writing the option should mitigate the effects
of the decline.
Writing a call option obligates the fund to sell or deliver the option's
underlying instrument in return for the strike price upon exercise of the
option. The characteristics of writing call options are similar to those of
writing put options, except that writing calls generally is a profitable
strategy if prices remain the same or fall. Through receipt of the option
premium, a call writer mitigates the effects of a price decline. At the same
time, because a call writer must be prepared to deliver the underlying
instrument in return for the strike price even if its current value is greater,
a call writer gives up some ability to participate in security price increases.
COMBINED POSITIONS. The fund may purchase and write options in combination
with one another, or in combination with futures or forward contracts, in order
to adjust the risk and return characteristics of the overall position. For
example, the fund may purchase a put option and write a call option on the same
underlying instrument in order to construct a combined position whose risk and
return characteristics are similar to selling a futures contract. Another
possible combined position would involve writing a call option at one strike
price and buying a call option at a lower price in order to reduce the risk of
the written call option in the event of a substantial price increase. Because
combined options positions involve multiple trades, they result in higher
transaction costs and may be more difficult to open and close out.
OVER-THE-COUNTER OPTIONS. Unlike exchange-traded options, which are
standardized with respect to the underlying instrument, expiration date,
contract size, and strike price, the terms of over-the-counter (OTC) options
(options not traded on exchanges) generally are established through negotiation
with the other party to the option contract. While this type of arrangement
allows the fund greater flexibility in tailoring an option to its needs, OTC
options generally involve greater credit risk than exchange-traded options,
which are guaranteed by the clearing organizations of the exchanges where they
are traded. The risk of illiquidity is also greater with OTC options because
these options generally can be closed out only by negotiation with the other
party to the option.
OPTIONS ON FUTURES. By purchasing an option on a futures contract, the fund
obtains the right, but not the obligation, to sell the futures contract (a put
option) or to buy the contract (a call option) at a fixed "strike" price. The
fund can terminate its position in a put option by allowing it to expire or by
exercising the option. If the option is exercised, the fund completes the sale
of the underlying security at the strike price. Purchasing an option on a
futures contract does not require the fund to make margin payments unless the
option is exercised.
CORRELATION OF PRICE CHANGES. Price changes of the fund's futures and options
positions may not be well correlated with price changes of its other
investments. This may be because of differences between the underlying indexes
and the types of securities in which the fund invests. For example, if the fund
sold a broad-based index futures contract to hedge against a stock market
decline while completing sales of specific securities in its investment
portfolio, the prices of the securities could move in a different direction than
the broad market index represented by the index futures contract. In the case of
an S&P 500 futures contract purchased by the fund, either in anticipation of
stock purchases or in an effort to be fully invested, failure of the contract to
track the index accurately could hinder the fund from achieving its investment
objective.
Options and futures prices can also diverge from the prices of their
underlying instruments even if the underlying instruments match the fund's
investments. Options and futures prices are affected by factors such as current
and anticipated short-term interest rates, changes in volatility of the
underlying instrument, and the time remaining until expiration of the contract;
these factors may not affect security prices the same way. Imperfect correlation
also may result from differing levels of demand in the options and futures
markets and the securities markets, from structural differences in how option
and futures and securities are traded, or from the imposition of daily price
fluctuation limits or trading halts. The fund may purchase or sell options and
futures contracts with a greater or lesser value than the securities it wishes
to hedge or intends to purchase in an effort to compensate for differences in
volatility between the contract and the securities, although this strategy may
not be successful in all cases. If price changes in the fund's options or
futures positions are poorly correlated with its other investments, the
positions may fail to produce anticipated gains or result in losses that are not
offset by gains in other investments.
LIQUIDITY OF FUTURES CONTRACTS AND OPTIONS. Futures and options have risks
associated with their use: possible default by the other party to the
transaction; illiquidity; and, to the extent the manager's interpretation of
certain market movements is incorrect, the risk that the use of such
transactions could result in losses greater than if they had not been used.
Losses resulting from the use of these transactions would reduce net asset value
and possibly income.
There is no assurance a liquid secondary market will exist for any particular
futures contract or option at any particular time. Options may have relatively
low trading volume and liquidity if their strike prices are not close to the
underlying instrument's current price. In addition, exchanges may establish
daily price fluctuation limits for futures contracts and options and may halt
trading if a contract's price moves upward or downward more than the limit in a
given day. On volatile trading days when the price fluctuation limit is reached
or a trading halt is imposed, it may be impossible for the fund to enter into
new positions or close out existing positions. If the secondary market for a
contract were not liquid because of price fluctuation limits or otherwise,
prompt liquidation of unfavorable positions could be difficult or impossible,
and the fund could be required to continue holding a position until delivery or
expiration regardless of changes in value. Under these circumstances, the fund's
access to assets held to cover its futures and options positions also could be
impaired.
RESTRICTIONS ON THE USE OF FUTURES CONTRACTS AND OPTION. The fund has filed a
notice of eligibility for exclusion as a "commodity pool operator" with the CFTC
and the National Futures Association, which regulates trading in the futures
markets. The fund intend to comply with Section 4.5 of the regulations under the
Commodity Exchange Act, which limits the extent to which the fund can commit
assets to initial margin deposits and options premiums.
The fund may enter into futures contracts, options, or options on futures
contracts, provided that such obligations represent no more than 20% of the
fund's net assets. Under the Commodity Exchange Act, the fund may enter into
futures and options transactions for hedging purposes without regard to the
percentage of assets committed to initial margin and option premiums and for
other than hedging purposes provided that assets committed to initial margin and
option premiums do not exceed 5% of the fund's net assets. To the extent
required by law, the fund will set aside cash and appropriate liquid assets in a
segregated account to cover its obligations related to futures contracts and
options.
The fund intends to comply with tax rules applicable to regulated investment
companies.
FUTURES AND OPTIONS RELATING TO FOREIGN CURRENCIES. The fund may purchase and
sell currency futures and purchase and write currency options to increase or
decrease its exposure to different foreign currencies. The fund may also
purchase and write currency options in conjunction with each other or with
currency futures or forward contracts.
Currency futures contracts are similar to forward currency exchange contracts,
except that they are traded on exchanges (and have margin requirements) and have
standard contract sizes and delivery dates. Most currency futures contracts call
for payment or delivery in U.S. dollars. The underlying instrument of a currency
option may be a foreign currency, which generally is purchased or delivered in
exchange for U.S. dollars, although it may be a futures contract. The purchaser
of a currency call obtains the right to purchase the underlying currency, and
the purchaser of a currency put obtains the right to sell the underlying
currency.
The uses and risks of currency futures and options are similar to those of
futures and options relating to securities or indexes, as described above.
Currency futures and option values can be expected to correlate with exchange
rates, but may not reflect other factors that affect the value of the fund's
investments. A currency hedge, for example, should protect a deutsche-mark
denominated security from a decline in the deutsche mark, but it will not
protect the fund against a price decline resulting from a deterioration in the
issuer's creditworthiness. Because the value of the fund's
foreign-currency-denominated investments will change in response to many factors
other than exchange rates, it may not be possible to match the amount of
currency options and futures to the value of the fund's foreign investments over
time.
INVESTMENT RESTRICTIONS
The fund's investment restrictions are set forth below. These investment
restrictions are fundamental and may not be changed without approval of a
majority of the outstanding votes of shareholders of the fund, as determined in
accordance with the Investment Company Act.
AS A FUNDAMENTAL POLICY, THE FUND SHALL NOT:
1) issue senior securities, except as permitted under the Investment Company
Act of 1940.
2) borrow money, except that the fund may borrow money for temporary or
emergency purposes (not for leveraging or investment) in an amount not exceeding
33-1/3% of the fund's total assets (including the amount borrowed) less
liabilities (other than borrowings).
3) lend any security or make any other loan if, as a result, more than 33-1/3%
of the fund's total assets would be lent to other parties, except, (i) through
the purchase of debt securities in accordance with its investment objective,
policies and limitations, or (ii) by engaging in repurchase agreements with
respect to portfolio securities.
4) purchase or sell real estate unless acquired as a result of ownership of
securities or other instruments. This policy shall not prevent the fund from
investment in securities or other instruments backed by real estate or
securities of companies that deal in real estate or are engaged in the real
estate business.
5) concentrate its investments in securities of issuers in a particular
industry (other than securities issued or guaranteed by the U.S. government or
any of its agencies or instrumentalities).
6) act as an underwriter of securities issued by others, except to the extent
that the fund may be considered an underwriter within the meaning of the
Securities Act of 1933 in the disposition of restricted securities.
7) purchase or sell physical commodities unless acquired as a result of
ownership of securities or other instruments; provided that this limitation
shall not prohibit the fund from purchasing or selling options and futures
contracts or from investing in securities or other instruments backed by
physical commodities.
8) invest for purposes of exercising control over management.
In addition, the fund is subject to the following additional investment
restrictions which are not fundamental and may be changed by the Board of
Directors.
AS AN OPERATING POLICY, THE FUND:
a) shall not purchase additional investment securities at any time during which
outstanding borrowings exceed 5% of the total assets of the fund.
b) shall not purchase any security or enter into a repurchase agreement if, as
a result, more than 15% of its net assets would be invested in repurchase
agreements not entitling the holder to payment of principal and interest within
seven days and in securities that are illiquid by virtue of legal or contractual
restrictions on resale or the absence of a readily available market.
c) shall not sell securities short, unless it owns or has the right to obtain
securities equivalent in kind and amount to the securities sold short, and
provided that transaction in futures contracts and options are not deemed to
constitute selling securities short.
d) shall not purchase securities on margin, except that the fund may obtain
such short-term credits as are necessary for the clearance of transactions, and
provided that margin payments in connection with futures contracts and options
on futures contracts shall not constitute purchasing securities on margin.
The fund shall not purchase any securities which would cause 25% or more of
the value of the fund's total assets at the time of purchase to be invested in
the securities of one or more issuers conducting their principal business
activities in the same industry, provided that (a) there is no limitation with
respect to obligations issued or guaranteed by the U.S. government, any state,
territory or possession of the Unites States, the District of Columbia or any of
their authorities, agencies, instrumentalities or political subdivisions and
repurchase agreements secured by such instruments, (b) wholly-owned finance
companies will be considered to be in the industries of their parents if their
activities are primarily related to financing the activities of the parents, (c)
utilities will be divided according to their services, for example, gas, gas
transmission, electric and gas, electric and telephone will each be considered a
separate industry, and (d) personal credit and business credit businesses will
be considered industries.
Unless otherwise indicated, percentage limitations included in the
restrictions apply at the time transactions are entered into. Accordingly, any
later increase or decrease beyond the specified limitation resulting from a
change in the fund's net assets will not be considered in determining whether it
has complied with its investment restrictions.
PORTFOLIO TURNOVER
The manager will purchase and sell securities without regard to the length of
time the security has been held. Accordingly, the fund's rate of portfolio
turnover may be substantial.
The fund intends to purchase a given security whenever the manager believes it
will contribute to the stated objective of the fund. In order to achieve the
fund's investment objective, the manager will sell a given security, no matter
for how long or for how short a period it has been held in the portfolio, and no
matter whether the sale is at a gain or at a loss, if the manager believes that
the security is not fulfilling its purpose, either because, among other things,
it did not live up to the manager's expectations, it may be replaced with
another security holding greater promise, it has reached its optimum potential,
there was a change in the circumstances of a particular company or industry or
in general economic conditions, or because of some combination of such reasons.
When a general decline in security prices is anticipated, the fund may
decrease or eliminate entirely its equity position and increase its cash
position, and when a rise in price levels is anticipated, the fund may increase
its equity position and decrease its cash position. However, it should be
expected that the fund will, under most circumstances, be essentially fully
invested in equity securities.
Since investment decisions are based on the anticipated contribution of the
security in question to the fund's objectives, the manager believes that the
rate of portfolio turnover is irrelevant when it believes a change is in order
to achieve those objectives, and the fund's annual portfolio turnover rate
cannot be anticipated and may be comparatively high. This disclosure regarding
portfolio turnover is a statement of fundamental policy and may be changed only
by a vote of the shareholders.
Since the manager does not take portfolio turnover rate into account in making
investment decisions, (1) the manager has no intention of accomplishing any
particular rate of portfolio turnover, whether high or low, and (2) the
portfolio turnover rates in the past should not be considered as a
representation of the rates that will be attained in the future.
PERFORMANCE ADVERTISING
The fund may quote performance in various ways. Historical performance
information will be used in advertising and sales literature and should not be
considered an indication of future results.
Yield quotations are based on the investment income per share earned during a
particular 30-day period, less expenses accrued during the period (net
investment income), and are computed by dividing a fund's net investment income
by its share price on the last day of the period, according to the following
formula:
YIELD = 2 [(a - b + 1)(6) - 1]
-----
cd
where a = dividends and interest earned during the period, b = expenses accrued
for the period (net of reimbursements), c = the average daily number of shares
outstanding during the period that were entitled to receive dividends, and d =
the maximum offering price per share on the last day of the period.
Total returns quoted in advertising and sales literature reflect all aspects
of the fund's return, including the effect of reinvesting dividends and capital
gain distributions and any change in the fund's net asset value during the
period.
Average annual total returns are calculated by determining the growth or
decline in value of a hypothetical historical investment in the fund over a
stated period and then calculating the annually compounded percentage rate that
would have produced the same result if the rate of growth or decline in value
had been constant throughout the period. For example, a cumulative total return
of 100% over 10 years would produce an average annual total return of 7.18%,
which is the steady annual rate that would result in 100% growth on a compounded
basis in 10 years. While average annual total returns are a convenient means of
comparing investment alternatives, investors should realize that a fund's
performance is not constant over time but changes from year-to-year, and that
average annual returns represent averaged figures as opposed to actual
year-to-year performance.
In addition to average annual total returns, the fund may quote unaveraged or
cumulative total returns reflecting the simple change in value of an investment
over a stated period. Average annual and cumulative total returns may be quoted
as a percentage or as a dollar amount and may be calculated for a single
investment, a series of investments, or a series of redemptions over any time
period. Total returns may be broken down into their components of income and
capital (including capital gains and changes in share price) in order to
illustrate the relationship of these factors and their contributions to total
return.
The fund's performance may be compared with the performance of other mutual
funds tracked by mutual fund rating services or with other indexes of market
performance. This may include comparisons with funds that, unlike American
Century funds, are sold with a sales charge or deferred sales charge. Economic
data that may be used for such comparisons may include, but are not limited to:
U.S. Treasury bill, note, and bond yields, money market fund yields, U.S.
government debt and percentage held by foreigners, the U.S. money supply, net
free reserves, and yields on current-coupon GNMAs (source: Board of Governors of
the Federal Reserve System); the federal funds and discount rates (source:
Federal Reserve Bank of New York); yield curves for U.S. Treasury securities and
AA/AAA-rated corporate securities (source: Bloomberg Financial Markets); yield
curves for AAA-rated tax-free municipal securities (source: Telerate); yield
curves for foreign government securities (sources: Bloomberg Financial Markets
and Data Resources, Inc.); total returns on foreign bonds (source: J.P. Morgan
Securities Inc.); various U.S. and foreign government reports; the junk bond
market (source: Data Resources, Inc.); the CRB Futures Index (source: Commodity
Index Report); the price of gold (sources: London am/pm fixing and New York
Comex Spot Price); rankings of any mutual fund or mutual fund category tracked
by Lipper Analytical Services, Inc. or Morningstar, Inc.; mutual fund rankings
published in major, nationally distributed periodicals; data provided by the
Investment Company Institute; Ibbotson Associates, Stocks, Bonds, Bills, and
Inflation; major indexes of stock market performance; and indexes and historical
data supplied by major securities brokerage or investment advisory firms. The
fund may also utilize reprints from newspapers and magazines furnished by third
parties to illustrate historical performance.
Indexes may assume reinvestment of dividends, but generally they do not
reflect administrative and management costs such as those incurred by a mutual
fund.
Occasionally statistics may be used to illustrate fund volatility or risk.
Measures of volatility or risk generally are used to compare the fund's net
asset value or performance to a market index. One measure of volatility is
"beta." Beta expresses fund volatility relative to the total market as
represented by the S&P 500. A beta of more than 1.00 indicates volatility
greater than the market, and a beta of less than 1.00 indicates volatility less
than the market. Another measure of volatility or risk is "standard deviation."
Standard deviation is used to measure variability of net asset value or total
return relative to an average over a specified period of time. The premise is
that greater volatility connotes greater risk undertaken to achieve desired
performance.
Pursuant to the Multiple Class Plan, the corporation may issue additional
classes of existing funds or introduce new funds with multiple classes available
for purchase. To the extent a new class is added to an existing fund, the
manager may, in compliance with SEC and NASD rules, regulations and guidelines,
market the new class of shares using the historical performance information of
the original class of shares. When quoting performance information for the new
class of shares for periods prior to the first full quarter after inception, the
original class' performance will be restated to reflect the expenses of the new
class. For periods after the first full quarter after inception, actual
performance of the new class will be used.
CAPITAL STOCK
The fund's capital stock is described in the Prospectus under the heading
"Further Information About American Century."
The corporation currently has six series of shares. American Century Small Cap
Quantitative Fund is described in this Statement of Additional Information. The
corporation may in the future issue one or more additional shares. The assets
belonging to each series or class of shares are held separately by the custodian
and the shares of each series or class represent a beneficial interest in the
principal, earnings and profit (or losses) of investment and other assets held
for each series or class. Your rights as a shareholder are the same for all
series or class of securities unless otherwise stated. Within their respective
series or class, all shares have equal redemption rights. Each share, when
issued, is fully paid and non-assessable. Each share, irrespective of series or
class, is entitled to one vote for each dollar of net asset value represented by
such share on all questions.
In the event of complete liquidation or dissolution of the fund, shareholders
of each series or class of shares shall be entitled to receive, pro rata, all of
the assets less the liabilities of that series or class.
CUSTODIAN
Chase Manhattan Bank, 4 Chase Metrotech Center, Brooklyn, New York 11245 and
Commerce Bank, N.A., 1000 Walnut, Kansas City, Missouri 64106 serve as
custodians of the fund's assets. Services provided by the custodian banks
include (i) settling portfolio purchases and sales, (ii) reporting failed
trades, (iii) identifying and collecting portfolio income, and (iv) providing
safekeeping of securities. The custodians take no part in determining the fund's
investment policies or in determining which securities are sold or purchased by
the fund.
INDEPENDENT AUDITORS
Coopers & Lybrand LLP, City Center Square, 1100 Main Street, Suite 900, Kansas
City, Missouri 64105-2140, serves as the independent auditors to examine the
financial statements of the fund. As independent auditors of the fund, Coopers &
Lybrand provides services including (1) audit of the annual financial
statements, (2) assistance and consultation in connection with SEC filings and
(3) review of the annual federal income tax return filed for the fund.
MULTIPLE CLASS STRUCTURE
The fund's Board of Directors has adopted a multiple class plan (the Multiple
Class Plan) pursuant to Rule 18f-3 adopted by the SEC. Pursuant to such plan,
the fund may issue up to three classes: an Investor Class, an Advisor Class and
an Institutional Class. Not all funds offer all three classes.
The Investor Class is made available to investors directly by the investment
manager through Funds Distributor, Inc., the fund's distributor, for a single
unified management fee, without any load or commission. The Institutional and
Advisor Classes are made available to institutional shareholders or through
financial intermediaries that do not require the same level of shareholder and
administrative services from the manager as Investor Class shareholders. As a
result, the manager is able to charge these classes a lower unified management
fee. In addition to the management fee, however, the Advisor Class shares are
subject to a Master Distribution and Shareholder Services Plan (described
below). The plan has been adopted by the fund's Board of Directors and initial
shareholder in accordance with Rule 12b-1 adopted by the SEC under the
Investment Company Act.
RULE 12B-1
Rule 12b-1 permits an investment company to pay expenses associated with the
distribution of its shares in accordance with a plan adopted by the investment
company's Board of Directors and approved by its shareholders. Pursuant to such
rule, the Board of Directors and initial shareholder of the fund's Advisor Class
have approved and entered into a Master Distribution and Shareholder Services
Plan, with respect to the Advisor Class (the Plan) which is described below.
In adopting the Plan, the Board of Directors [including a majority who are not
"interested persons" of the fund (as defined in the Investment Company Act),
hereafter referred to as the "independent directors"] determined that there was
a reasonable likelihood that the Plan would benefit the fund and the
shareholders of the affected class. Pursuant to Rule 12b-1, information with
respect to revenues and expenses under the Plan is presented to the Board of
Directors quarterly for its consideration in connection with its deliberations
as to the continuance of the Plan. Continuance of the Plan must be approved by
the Board of Directors (including a majority of the independent directors)
annually. The Plan may be amended by a vote of the Board of Directors (including
a majority of the independent directors), except that the Plan may not be
amended to materially increase the amount to be spent for distribution without
majority approval of the shareholders of the affected class. The Plan terminates
automatically in the event of an assignment and may be terminated upon a vote of
the majority of the independent directors or by vote of a majority of the
outstanding voting securities of the affected class.
All fees paid under the Plan will be made in accordance with Section 26 of the
Rules of Fair Practice of the National Association of Securities Dealers (NASD).
MASTER DISTRIBUTION AND SHAREHOLDER SERVICES PLAN
As described in the Prospectus, the fund's Advisor Class of shares is made
available to participants in employer-sponsored retirement or savings plans and
to persons purchasing through financial intermediaries, such as banks,
broker-dealers and insurance companies. The Distributor enters into contracts
with various banks, broker-dealers, insurance companies and other financial
intermediaries with respect to the sale of the fund's shares and/or the use of
the fund's shares in various investment products or in connection with various
financial services.
Certain recordkeeping and administrative services that are provided by the
fund's transfer agent for the Investor Class shareholders may be performed by a
plan sponsor (or its agents) or by a financial intermediary for shareholders in
the Advisor Class. In addition to such services, the financial intermediaries
provide various distribution services.
To enable the fund's shares to be made available through such plans and
financial intermediaries, and to compensate them for such services, the fund's
investment manager has reduced its management fee by 0.25% per annum with
respect to the Advisor Class shares and the fund's Board of Directors has
adopted a Master Distribution and Shareholder Services Plan (the Distribution
Plan). Pursuant to such Plan, the Advisor Class shares pay the Distributor a fee
of 0.50% annually of the aggregate average daily assets of the fund's Advisor
Class shares, 0.25% of which is paid for Shareholder Services (as described
above) and 0.25% of which is paid for distribution services.
Distribution services include any activity undertaken or expense incurred that
is primarily intended to result in the sale of Advisor Class shares, which
services may include but are not limited to, (a) the payment of sales
commission, ongoing commissions and other payments to brokers, dealers,
financial institutions or others who sell Advisor Class shares pursuant to
Selling Agreements; (b) compensation to registered representatives or other
employees of Distributor who engage in or support distribution of the fund's
Advisor Class shares; (c) compensation to, and expenses (including overhead and
telephone expenses) of the Distributor; (d) the printing of prospectuses,
statements of additional information and reports for other than existing
shareholders; (e) the preparation, printing and distribution of sales literature
and advertising materials provided to the fund's shareholders and prospective
shareholders; (f) receiving and answering correspondence from prospective
shareholders, including distributing prospectuses, statements of additional
information, and shareholder reports; (g) the providing of facilities to answer
questions from prospective investors about fund shares; (h) complying with
federal and state securities laws pertaining to the sale of fund shares; (i)
assisting investors in completing application forms and selecting dividend and
other account options; (j) the providing of other reasonable assistance in
connection with the distribution of fund shares; (k) the organizing and
conducting of sales seminars and payments in the form of transactional
compensation or promotional incentives; (l) profit on the foregoing; (m) the
payment of "service fees" for the provision of personal, continuing services to
investors, as contemplated by the Rules of Fair Practice of the NASD and (n)
such other distribution and services activities as the manager determines may be
paid for by the fund pursuant to the terms of the Distribution Plan and in
accordance with Rule 12b-1 of the Investment Company Act.
BROKERAGE
Under the management agreement between the fund and the manager, the manager has
the responsibility of selecting brokers to execute portfolio transactions. The
fund's policy is to secure the most favorable prices and execution of orders on
its portfolio transactions. So long as that policy is met, the manager may take
into consideration the factors discussed below when selecting brokers.
The manager receives statistical and other information and services without cost
from brokers and dealers. The manager evaluates such information and services,
together with all other information that it may have, in supervising and
managing the investments of the fund. Because such information and services may
vary in amount, quality and reliability, their influence in selecting brokers
varies from none to very substantial. The manager proposes to continue to place
some of the fund's brokerage business with one or more brokers who provide
information and services. Such information and services will be in addition to
and not in lieu of services required to be performed by the manager. The manager
does not utilize brokers that provide such information and services for the
purpose of reducing the expense of providing required services to the fund.
The brokerage commissions paid by the fund may exceed those which another
broker might have charged for effecting the same transactions, because of the
value of the brokerage and research services provided by the broker. Research
services furnished by brokers through whom the fund effects securities
transactions may be used by the manager in servicing all of its accounts, and
not all such services may be used by the manager in managing the portfolios of
the fund.
The staff of the SEC has expressed the view that the best price and
execution of over-the-counter transactions in portfolio securities may be
secured by dealing directly with principal market makers, thereby avoiding the
payment of compensation to another broker. In certain situations, the officers
of the fund and the manager believe that the facilities, expert personnel and
technological systems of a broker often enable the fund to secure as good a net
price by dealing with a broker instead of a principal market maker, even after
payment of the compensation to the broker. The fund regularly place its
over-the-counter transactions with principal market makers, but also may deal on
a brokerage basis when utilizing electronic trading networks or as circumstances
warrant.
OFFICERS AND DIRECTORS
The principal officers and directors of the corporation, their ages (listed
in parentheses), principal business experience during the past five years, and
their affiliation with the fund's investment manager, American Century
Investment Management, Inc. and its transfer agent, American Century Services
Corporation, are listed below. The address at which each director and officer
listed below may be contacted, with the exception of Messrs. Stowers III, Lyons,
Looby, May, Leach and Zindel and Ms. Roepke, is 1665 Charleston Road, Mountain
View, California 94043. The address of Messrs. Stowers III, Lyons, Looby, May,
Leach and Zindel and Ms. Roepke is American Century, 4500 Main Street, Kansas
City, Missouri 64111. All persons named as officers for the corporation also
serve in similar capacities for other fund advised by the manager. Those
directors that are "interested persons"as defined in the Investment Company Act
of 1940 are indicated by an asterisk (*).
*William M. Lyons (42), Director (1998). Mr. Lyons is President, Chief
Operating Officer and General Counsel of ACC; Executive Vice President and
General Counsel of ASC and ACIS; Assistant Secretary of ACC; and Secretary of
ACS and ACIS.
*James E. Stowers III (39), Chairman of the Board of Director (1998) and
Trustee/Director (1995). Mr. Stowers III is Chief Executive Officer and Director
of ACC; Chief Executive Officer and Director of ACS and ACIS.
Albert A. Eisenstat (67), Director (1995). Mr. Eisenstat is an independent
Director of each of Commercial Metals Co. (1982), Sungard Data Systems (1991)
and Business Objects S/A (1994). Previously, he served as Vice President of
Corporate Development and Corporate Secretary of Apple Computer and served on
its Board of Directors (1985 to 1993).
Ronald J. Gilson, (51), Director (1995). Mr. Gilson is the Charles J. Meyers
Professor of Law and Business at Stanford Law School (1979) and the Mark and Eva
Stern Professor of Law and Business at Columbia University School of Law(1992).
He is counsel to Marron, Ried & Sheehy (a San Francisco law firm, 1984).
Myron S. Scholes (56), Director (1988). Mr. Scholes was awarded the 1997 Nobel
Memorial Prize in Economic Sciences for his role in the development of the
Black-Scholes option pricing model.Mr. Scholes is a principal of Long-Term
Capital Management (1993). He is also Frank E. Buck Professor of Finance at the
Stanford Graduate School of Business (1983), a Director of Dimensional Fund
Advisors (1982) and the Smith Breeden Family of Funds (1992). From August 1991
to June 1993, Mr. Scholes was a Managing Director of Salomon Brothers Inc.
(securities brokerage).
Kenneth E. Scott (69), Director (1988). Mr. Scott is Ralph M. Parsons
Professor of Law and Business at Stanford Law School (1972) and a Director of
RCM Capital Management (1994).
Isaac Stein (51), Director (1992). Mr. Stein is former Chairman of the Board
(1990 to 1992) and Chief Executive Officer (1991 to 1992) of Esprit de Corp.
(clothing manufacturer). He is a member of the Board of Raychem Corporation
(electrical equipment, 1993), President of Waverley Associates, Inc. (private
investment firm, 1983), and a Director of ALZA Corporation (pharmaceuticals,
1987). He is also a Trustee of Stanford University (1994) and Chairman of
Stanford Health Services (hospital, 1994).
Jeanne D. Wohlers (52), Director (1988). Ms. Wohlers is a private investor,
and an independent Director and Partner of Windy Hill Productions, LP.
Previously, she served as Vice President and Chief Financial Officer of Sybase,
Inc. (software company, 1988 to 1992).
Richard W. Ingram (42), President (1998); Executive Vice President and
Director of Client Services and Treasury Administration, Funds Distributor, Inc.
(FDI). Mr. Ingram joined FDI in 1995. Prior to joining FDI, Mr. Ingram served as
Vice President and Division Manager of First Data Investor Services Group, Inc.
(from March 1994 to November 1995) and before that as Vice President, Assistant
Treasurer and Tax Director-Mutual Funds of The Boston Company, Inc. (from 1989
to 1994).
*Douglas A. Paul (51), Secretary (1988), Vice President (1990), and General
Counsel (1990); Vice President and Associate General Counsel, ACS.
*Maryanne Roepke (42), CPA, Treasurer (1995) and Vice President (1998); Senior
Vice President and Assistant Treasurer of ACS.
Christopher J. Kelley (33), Vice President (1998); Vice President and
Associate General Counsel of FDI. Mr. Kelley joined FDI in 1996. Prior to
joining FDI, Mr. Kelley served as Assistant Counsel at Forum Financial Group
(from April 1994 to July 1996) and before that as a compliance officer for
Putnam Investments (from 1992 to 1994).
Mary A. Nelson (34), Vice President (1998); Vice President and Manager of
Treasury Services and Administration of FDI. Ms. Nelson joined FDI in 1995.
Prior to joining FDI, Ms. Nelson served as Assistant Vice President and Client
Manager for The Boston Company, Inc. (from 1989 to 1994).
*Jon Zindel (30), Tax Officer (1997); Director of Taxation (1996); Vice
President of ACS (1998); Tax Manager, Price Waterhouse LLP (1989).
*Merele A. May (35), Controller (1996); Vice President of ACS (1998).
*Robert J. Leach (31), Controller (1996).
*C. Jean Wade (34), Controller, (1996).
DIRECTOR COMPENSATION FOR THE FISCAL YEAR ENDED DECEMBER 31, 1997
Total Compensation
Name From the American Century
Director* Family of Funds**
- --------------------------------------------------------------------------------
Albert A. Eisenstat $69,250
Ronald J. Gilson $74,000
Myron S. Scholes $68,250
Kenneth E. Scott $77,000
Ezra Solomon*** $3,500
Isaac Stein $69,500
Jeanne D. Wohlers $72,500
- --------------------------------------------------------------------------------
* Interested Directors receive no compensation for their services as such.
** Includes compensation paid by the fifteen investment company members of the
American Century family of funds.
***Retired December, 1996.
As of June 30, 1998, the fund's Directors and officers as a group owned less
than 1% of the fund's outstanding shares.
The corporation has adopted the American Century Mutual Funds Deferred
Compensation Plan for Non-Interested Directors. Under the Plan, the
non-interested person directors may defer receipt of all or part of the fees to
be paid to them for serving as directors of the corporation.
Under the Plan, all deferred fees are credited to an account established in
the name of the directors. The amounts credited to the account then increase or
decrease, as the case may be, in accordance with the performance of one or more
of the American Century funds that are selected by the director. The account
balance continues to fluctuate in accordance with the performance of the
selected fund or funds until final payment of all amounts credited to the
account. Directors are allowed to change their designation of mutual funds from
time to time.
No deferred fees are payable until such time as a director resigns, retires or
otherwise ceases to be a member of the Board of Directors. Directors may receive
deferred fee account balances either in a lump sum payment or in substantially
equal installment payments to be made over a period not to exceed 10 years. Upon
the death of a director, all remaining deferred fee account balances are paid to
the director's beneficiary or, if none, to the director's estate.
The Plan is an unfunded plan and, accordingly, American Century has no
obligation to segregate assets to secure or fund the deferred fees. The rights
of the directors to receive their deferred fee account balances are the same as
the rights of a general unsecured creditor of the corporation. The Plan may be
terminated at any time by the administrative committee of the Plan. If
terminated, all deferred fee account balances will be paid in a lump sum.
No deferred fees were paid to any director under the Plan during the fiscal
year ended December 31, 1997.
Those directors who are "interested persons," as defined in the Investment
Company Act, receive no fee as such for serving as a director. The salaries of
such individuals, who also are officers of the fund, are paid by the manager.
MANAGEMENT
A description of the responsibilities and method of compensation of the fund's
manager, American Century Investment Management, Inc., appears in the Prospectus
under the caption "Management."
For the services provided to the fund, the manager receives a monthly fee
based on a percentage of the average net assets of the fund. The annual rate at
which this fee is assessed is determined monthly in a two-step process: First, a
fee rate schedule is applied to the assets of all of the funds in a fund's
investment category which are managed by the manager (the Investment Category
Fee). Second, a separate fee rate schedule is applied to the assets of all of
the fund managed by the manager (the Complex Fee). The Investment Category Fee
and the Complex Fee are then added to determine the unified management fee
payable by the fund to the manager.
The schedule by which the Investment Category Fee is determined is as follows:
Category Assets Fee Rate
- -------------------------------------------------------------------------------
First $1 billion 0.7200%
Next $5 billion 0.6600%
Next $15 billion 0.6160%
Next $25 billion 0.5690%
Next $50 billion 0.5420%
Next $150 billion 0.5390%
Thereafter 0.5380%
- ------------------------------------------------------------------------------
The Complex Fee Schedule (Investor Class) is as follows:
Category Assets Fee Rate
- ------------------------------------------------------------------------------
First $2.5 billion 0.3100%
Next $7.5 billion 0.3000%
Next $15.0 billion 0.2985%
Next $25.0 billion 0.2970%
Next $50.0 billion 0.2960%
Next $100.0 billion 0.2950%
Next $100.0 billion 0.2940%
Next $200.0 billion 0.2930%
Next $250.0 billion 0.2920%
Next $500.0 billion 0.2910%
Thereafter 0.2900%
- ------------------------------------------------------------------------------
The Complex Fee schedule for the Institutional Class is lower by 0.2000% at
each graduated step. For example, if the Investor Class Complex Fee is 0.3000%
for the first $2 billion, the Institutional Class Complex Fee is 0.1000%
(0.3000% minus 0.2000%) for the first $2 billion. The Complex Fee schedule for
the Advisor Class is lower by 0.2500% at each graduated step.
On the first business day of each month, the fund pays a management fee to the
manager for the previous month at the specified rate. The fee for the previous
month is calculated by multiplying the applicable fee for the fund by the
aggregate average daily closing value of the fund's net assets during the
previous month by a fraction, the numerator of which is the number of days in
the previous month and the denominator of which is 365 (366 in leap years).
The management agreement shall continue in effect until the earlier of the
expiration of two years from the date of its execution or until the first
meeting of shareholders following such execution and for as long thereafter as
its continuance is specifically approved at least annually by (1) the fund's
Board of Directors, or by the vote of a majority of outstanding votes (as
defined in the Investment Company Act) and (2) by the vote of a majority of the
directors of the fund who are not parties to the agreement or interested persons
of the manager, cast in person at a meeting called for the purpose of voting on
such approval.
The management agreement provides that it may be terminated at any time
without payment of any penalty by the fund's Board of Directors, or by a vote of
a majority of the fund's shareholders, on 60 days' written notice to the
manager, and that it shall be automatically terminated if it is assigned.
The management agreement provides that the manager shall not be liable to the
fund or its shareholders for anything other than willful misfeasance, bad faith,
gross negligence or reckless disregard of its obligations and duties.
The management agreement also provides that the manager and its officers,
directors and employees may engage in other business, devote time and attention
to any other business whether of a similar or dissimilar nature, and render
services to others.
Certain investments may be appropriate for the fund and also for other clients
advised by the manager. Investment decisions for the fund and other clients are
made with a view to achieving their respective investment objectives after
consideration of such factors as their current holdings, availability of cash
for investment, and the size of their investment generally. A particular
security may be bought or sold for only one client or series, or in different
amounts and at different times for more than one but less than all clients or
series. In addition, purchases or sales of the same security may be made for two
or more clients or series on the same date. Such transactions will be allocated
among clients in a manner believed by the manager to be equitable to each. In
some cases this procedure could have an adverse effect on the price or amount of
the securities purchased or sold by the fund.
The manager may aggregate purchase and sale orders of the fund with purchase
and sale orders of its other clients when the manager believes that such
aggregation provides the best execution for the fund. The fund's Board of
Directors has approved the policy of the manager with respect to the aggregation
of portfolio transactions. Where portfolio transactions have been aggregated,
the fund participates at the average share price for all transactions in that
security on a given day and share transaction costs on a pro rata basis. The
manager will not aggregate portfolio transactions of the fund unless it believes
such aggregation is consistent with its duty to seek best execution on behalf of
the fund and the terms of the management agreement. The manager receives no
additional compensation or remuneration as a result of such aggregation.
In addition to managing the fund, the manager also acts as an investment advisor
to 12 institutional accounts and to the following registered investment
companies: American Century Mutual Funds, Inc., American Century World Mutual
Funds, Inc., American Century Premium Reserves, Inc., American Century Variable
Portfolios, Inc., American Century Capital Portfolios, Inc., American Century
Strategic Asset Allocations, Inc., American Century Municipal Trust, American
Century Government Income Trust, American Century Investment Trust, American
Century Target Maturities Trust, American Century California Tax-Free and
Municipal Funds, and American Century International Bond Funds.
American Century Services Corporation provides physical facilities, including
computer hardware and software and personnel, for the day-to-day administration
of the fund and of the manager. The manager pays American Century Services
Corporation for such services.
HOLIDAYS
The fund does not determine the net asset value of their shares on days when the
New York Stock Exchange is closed. Currently, the Exchange is closed on
Saturdays and Sundays, and on holidays, namely New Year's Day, Martin Luther
King Jr. Day, Presidents Day, Good Friday, Memorial Day, Independence Day, Labor
Day, Thanksgiving and Christmas.
P.O. BOX 419200
KANSAS CITY, MISSOURI
64141-6200
INVESTOR SERVICES:
1-800-345-2021 OR 816-531-5575
AUTOMATED INFORMATION LINE:
1-800-345-8765
TELECOMMUNICATIONS DEVICE FOR THE DEAF:
1-800-634-4113 OR 816-444-3485
FAX: 816-340-7962
www.americancentury.com
[american century logo]
American
Century(reg.sm)
<PAGE>
- --------------------------------------------------------------------------------
PART C OTHER INFORMATION
Item 24. Financial Statements and Exhibits
(a) Financial Statements
(i) Financial Statements filed in Part A of the Registration
Statement:
1. None.
(ii) Financial Statements filed in Part B of the Registration
Statement:
1. None.
(b) Exhibits (all exhibits not filed herewith are being incorporated
herein by reference)
1. Amended and Restated Articles of Incorporation of American
Century Quantitative Equity Funds dated July 30, 1997 (filed
electronically as an Exhibit to Post-Effective Amendment No. 20
on Form N-1A on August 29, 1997, File No. 33-19589.
2. Amended and Restated Bylaws of American Century Quantitative
Equity Funds dated March 9, 1998 (filed herewith as EX-99.B2).
3. Voting Trust Agreements - None.
4. (a) Specimen copy of the American Century Global Gold Fund share
certificate is incorporated herein by reference to Exhibit 4
to Pre-Effective Amendment No. 2 filed July 12,1988.
(b) Specimen copy of the American Century Income & Growth Fund
share certificate is incorporated herein by reference to
Exhibit 4 to Post-Effective Amendment No 5 filed March 1,
1991.
(c) Specimen copy of the American Century Equity Growth Fund
share certificate is incorporated herein by reference to
Exhibit 4 to Post-Effective Amendment No 5 filed March 1,
1991.
(d) Specimen copy of the American Century Utilities Fund share
certificate is incorporated herein by reference to Exhibit
4(d) to Post-Effective Amendment No. 11 filed February 28,
1993.
(e) Specimen copy of the American Century Global Natural
Resources Fund share certificate is incorporated herein by
reference to Exhibit 4(e) to Post-Effective Amendment No. 13
filed.
5. (a) Management Agreement - Investor Class between American
Century Quantitative Equity Funds and American Century
Investment Management, Inc., dated August 1, 1997, (filed
electronically as an Exhibit to Post-Effective Amendment No.
33 on Form N1-A of American Century Government Income Trust,
File No. 2-99222).
(b) Management Agreement - Advisor Class between American
Century Quantitative Equity Funds and American Century
Investment Management, Inc., dated August 1, 1997, (filed
electronically as an Exhibit to Post-Effective Amendment No.
27 on Form N1-A of American Century Target Maturities Trust,
File No. 2-94608).
(c) Management Agreement - Institutional Class between American
Century Quantitative Equity Funds and American Century
Investment Management, Inc., dated August 1, 1997, (filed
electronically as an Exhibit to Post-Effective Amendment No.
20 on Form N1-A on August 29, 1997, File No. 33-19589).
6. Distribution Agreement between American Century Quantitative
Equity Funds and Funds Distributor, Inc., dated January 15, 1998
(filed electronically as an Exhibit to Post-Effective Amendment
No. 28 on Form N1-A of American Century Target Maturities Trust,
File No. 2-94608).
7. Bonus and Profit Sharing Plan, Etc. - None.
8. Global Custody Agreement between The Chase Manhattan Bank and the
Twentieth Century and Benham funds, dated August 9, 1996, (filed
electronically as an Exhibit to Post-Effective Amendment No. 31
on Form N1-A of American Century Government Income Trust, File
No. 2-99222).
9. Transfer Agency Agreement between American Century Quantitative
Equity Funds and American Century Services Corporation, dated
August 1, 1997, (filed electronically as an Exhibit to
Post-Effective Amendment No. 33 on Form N1-A of American Century
Government Income Trust, File No. 2-99222).
10. Opinion and Consent of Counsel (filed herewith as EX-99.B10).
11. Consent of Auditors - None.
12. Annual Report - None.
13. Agreements for Initial Capital, Etc. - None.
14. (a) American Century Individual Retirement Account plan,
including all instructions and other relevant documents, is
incorporated herein by reference to Exhibit 14(a) to
Post-Effective Amendment No. 9 filed October 3, 1992.
(b) American Century Pension/Profit-Sharing plan, including all
instructions and other relevant documents, is incorporated
herein by reference to Exhibit 14(b) to Post-Effective
Amendment No. 9 filed October 3, 1992.
15. Master Distribution and Shareholder Services Plan of American
Century Government Income Trust, American Century International
Bond Fund, American Century Target Maturities Trust and American
Century Quantitative Equity Funds (Advisor Class) dated August 1,
1997, (filed electronically as an Exhibit to Post-Effective
Amendment No. 27 on Form N1-A of American Century Target
Maturities Trust, File No. 2-94608).
16. Schedules for Computation of Advertising Performance Quotations -
None.
17. Power of Attorney dated January 15, 1998 (filed herewith as
EX-99.B17).
18. Multiple Class Plan of American Century California Tax-Free and
Municipal Funds, American Century Government Income Trust,
American Century International Bond Funds, American Century
Investment Trust, American Century Municipal Trust, American
Century Target Maturities Trust and American Century Quantitative
Equity Funds dated August 1, 1997, (filed electronically as an
Exhibit to Post-Effective Amendment No. 27 on Form N1-A of
American Century Target Maturities Trust, File No. 2-94608).
Item 25. Persons Controlled by or Under Control with Registrant - None.
Item 26. Number of Holders of Securities - The Small Cap Quantitative Fund has
no holders of Securities.
Item 27. Indemnification.
Under the laws of the State of California, the Directors are entitled and
empowered to purchase insurance for and to provide by resolution or in the
Bylaws for indemnification out of Corporation assets for liability and for
all expenses reasonably incurred or paid or expected to be paid by a
Director or officer in connection with any claim, action, suit, or
proceeding in which he or she becomes involved by virtue of his or her
capacity or former capacity with the Corporation. The provisions, including
any exceptions and limitations concerning indemnification, may be set forth
in detail in the Bylaws or in a resolution adopted by the Board of
Directors.
Registrant hereby incorporates by reference, as though set forth fully
herein, Article II, Section 16 of Registrant's Amended and Restated Bylaws,
dated May 31, 1995, appearing as Exhibit 2(c) of Post-Effective Amendment
No. 17 filed on February 26, 1996.
Item 28. Business and Other Connections of Investment Advisor.
American Century Investment Management, Inc., the investment manager to
each of the Registrant's Funds, is engaged in the business of managing
investments for deferred compensation plans and other institutional
investors.
Item 29. Principal Underwriters.
(a) Funds Distributor, Inc. (the "Distributor") acts as principal
underwriter for the following investment companies.
American Century California Tax-Free and Municipal Funds
American Century Capital Portfolios, Inc.
American Century Government Income Trust
American Century International Bond Funds
American Century Investment Trust
American Century Municipal Trust
American Century Mutual Funds, Inc.
American Century Premium Reserves, Inc.
American Century Quantitative Equity Funds
American Century Strategic Asset Allocations, Inc.
American Century Target Maturities Trust
American Century Variable Portfolios, Inc.
American Century World Mutual Funds, Inc.
BJB Investment Funds
The Brinson Funds
Dresdner RCM Capital Funds, Inc.
Dresdner RCM Equity Funds, Inc.
Harris Insight Funds Trust
HT Insight Funds, Inc. d/b/a Harris Insight Funds
J.P. Morgan Institutional Funds
J.P. Morgan Funds
The JPM Series Trust
The JPM Series Trust II
LaSalle Partners Funds, Inc.
Monetta Fund, Inc.
Monetta Trust
The Montgomery Funds
The Montgomery Funds II
The Munder Framlington Funds Trust
The Munder Funds Trust
The Munder Funds, Inc.
Orbitex Group of Funds
St. Clair Funds, Inc.
The Skyline Funds
Waterhouse Investors Family of Funds, Inc.
WEBS Index Fund, Inc.
The Distributor is registered with the Securities and Exchange
Commission as a broker-dealer and is a member of the National
Association of Securities Dealers. The Distributor is located at
60 State Street, Suite 1300, Boston, Massachusetts 02109. The
Distributor is an indirect wholly-owned subsidiary of Boston
Institutional Group, Inc., a holding company all of whose
outstanding shares are owned by key employees.
(b) The following is a list of the executive officers, directors and
partners of the Distributor:
<TABLE>
Name and Principal Business Positions and Offices with Positions and Offices with
Address* Underwriter Registrant
<S> <C> <C>
Marie E. Connolly Director, President and Chief none
Executive Officer
Richard W. Ingram Executive Vice President President, Principal Executive
and Principal Financial Officer
Donald R. Roberson Executive Vice President none
William S. Nichols Executive Vice President none
Michael S. Petrucelli Senior Vice President none
Joseph F. Tower, III Director, Senior Vice President, none
Treasurer and Chief Financial
Officer
Paula R. David Senior Vice President none
Allen B. Closser Senior Vice President none
Bernard A. Whalen Senior Vice President none
William J. Nutt Director none
- --------------------
* All addresses are 60 State Street, Suite 1300, Boston, Massachusetts 02109
</TABLE>
(c) Not applicable.
Item 30. Location of Accounts and Records.
American Century Investment Management, Inc., the Registrant, and its agent
for transfer and administrative services, American Century Services
Corporation, maintains their principal office at 4500 Main St., Kansas
City, MO 64111. American Century Services Corporation maintains physical
possession of each account, book, or other document, and shareholder
records as required by ss.31(a) of the 1940 Act and rules thereunder.
Item 31. Management Services - None.
Item 32. Undertakings.
a. Not Applicable.
b. The Registrant hereby undertakes to file a Post-Effective Amendment to
this Registration Statement, using reasonably current financial
statements which need not be certified, within four to six months from
the effective date of the Registrant's 1933 Act Registration
Statement.
c. Registrant hereby undertakes to furnish each person to whom a
prospectus is delivered a copy of Registrant's latest annual report to
shareholders, upon request and without charge.
d. Registrant hereby undertakes that it will, if requested to do so by
the holders of at least 10% of the Registrant's outstanding shares,
call a meeting of shareholders for the purpose of voting upon the
question of the removal of a director and to assist in communication
with other shareholders as required by Section 16(c).
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, American Century Quantitative Equity Funds, the
Registrant, has duly caused this Post-Effective Amendment No. 21/Amendment No.
23 to its Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Kansas City, State of Missouri, on the
15th day of April, 1998.
AMERICAN CENTURY QUANTITATIVE EQUITY FUNDS (Registrant)
By: /s/ Patrick A. Looby
Patrick A. Looby
Vice President
Pursuant to the requirements of the Securities Act of 1933, this Post-Effective
Amendment No. 21/Amendment No. 23 has been signed below by the following persons
in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
Date
<S> <C> <C>
*Richard W. Ingram President, Principal April 15, 1998
- --------------------------------- Executive and Principal
Richard W. Ingram Financial Officer
*Maryanne Roepke Vice President, Treasurer April 15, 1998
- --------------------------------- and Principal Accounting
Maryanne Roepke Officer
*Albert A. Eisenstat Director April 15, 1998
- ---------------------------------
Albert A. Eisenstat
*Ronald J. Gilson Director April 15, 1998
- ---------------------------------
Ronald J. Gilson
*William M. Lyons Director April 15, 1998
- ---------------------------------
William M. Lyons
*Myron S. Scholes Director April 15, 1998
- ---------------------------------
Myron S. Scholes
*Kenneth E. Scott Director April 15, 1998
- ---------------------------------
Kenneth E. Scott
*Isaac Stein Director April 15, 1998
- ---------------------------------
Isaac Stein
*James E. Stowers III Director April 15, 1998
- ---------------------------------
James E. Stowers III
*Jeanne D. Wohlers Director April 15, 1998
- ---------------------------------
Jeanne D. Wohlers
</TABLE>
*By /s/ Patrick A. Looby
Patrick A. Looby
Attorney-in-Fact
EXHIBIT DESCRIPTION
EX-99.B1 Amended and Restated Articles of Incorporation of American Century
Quantitative Equity Funds dated July 30, 1997 (filed as a part of
Post-Effective Amendment No. 20 to the Registration Statement on
Form N1-A of the Registrant, File No. 33-19589, filed on August 29,
1997, and incorporated herein by reference).
EX-99.B2 Amended and Restated Bylaws dated March 9, 1998.
EX-99.B4a Specimen copy of the American Century Global Gold Fund share
certificate is incorporated herein by reference to Exhibit 4 to
Pre-Effective Amendment No. 2 filed July 12, 1988.
EX-99.B4b Specimen copy of the American Century Income & Growth Fund share
certificate is incorporated herein by reference to Exhibit 4 to
Post-Effective Amendment No 5 filed March 1, 1991.
EX-99.B4c Specimen copy of the American Century Equity Growth Fund share
certificate is incorporated herein by reference to Exhibit 4 to
Post-Effective Amendment No 5 filed March 1, 1991.
EX-99.B4d Specimen copy of the American Century Utilities Fund share
certificate is incorporated herein by reference to Exhibit 4(d) to
Post-Effective Amendment No. 11 filed February 28, 1993.
EX-99.B4e Specimen copy of the American Century Global Natural Resources Fund
share certificate is incorporated herein by reference to Exhibit
4(e) to Post-Effective Amendment No. 13 filed.
EX-99.B5a Management Agreement - Investor Class between American Century
Quantitative Equity Funds and American Century Investment
Management, Inc., dated August 1, 1997 (filed as a part of
Post-Effective Amendment No. 33 to the Registration Statement on
Form N1-A of American Century Government Income Trust, File No.
2-99222, filed July 31, 1997, and incorporated herein by reference).
EX-99.B5b Management Agreement - Advisor Class between American Century
Quantitative Equity Funds and American Century Investment
Management, Inc., dated August 1, 1997 (filed as a part of
Post-Effective Amendment No. 27 to the Registration Statement on
Form N1-A of for American Century Target Maturities Trust, File No.
2-94608, filed on August 29, 1997, and incorporated herein by
reference).
EX-99.B5c Management Agreement - Institutional Class between American Century
Quantitative Equity Funds and American Century Investment
Management, Inc., dated August 1, 1997 (filed as a part of
Post-Effective Amendment No. 20 to the Registration Statement on
Form N1-A of the Registrant, File No. 33-19589, filed on August 29,
1997, and incorporated herein by reference).
EX-99.B6 Distribution Agreement between American Century Quantitative Equity
Funds and Funds Distributor, Inc., dated January 15, 1998 (filed as
a part of Post-Effective Amendment No. 28 to the Registration
Statement on Form N1-A of American Century Target Maturities Trust,
File No. 2-94608, filed on January 30, 1998, and incorporated herein
by reference).
EX-99.B8 Global Custody Agreement between The Chase Manhattan Bank and the
Twentieth Century and Benham funds, dated August 9, 1996
Post-Effective Amendment No. 31 to the Registration Statement on
Form N1-A of American Century Government Income Trust, File No.
2-99222, filed on February 7, 1997, and incorporated herein by
reference).
EX-99.B9 Transfer Agency Agreement between American Century Quantitative
Equity Funds and American Century Services Corporation, dated August
1, 1997 (filed as a part of Post-Effective Amendment No. 33 to the
Registration Statement on Form N1-A of American Century Government
Income Trust, File No. 2-99222, filed on July 31, 1997, and
incorporated herein by reference).
EX-99.B10 Opinion and Consent of Janet A. Nash, Esq.
EX-99.B14a American Century Individual Retirement Account plan, including all
instructions and other relevant documents, is incorporated herein by
reference to Exhibit 14(a) to Post-Effective Amendment No. 9 filed
October 3, 1992.
EX-99.B14b American Century Pension/Profit-Sharing plan, including all
instructions and other relevant documents, is incorporated herein by
reference to Exhibit 14(b) to Post-Effective Amendment No. 9 filed
October 3, 1992.
EX-99.B15 Master Distribution and Shareholder Services Plan of American
Century Government Income Trust, American Century International Bond
Fund, American Century Target Maturities Trust and American Century
Quantitative Equity Funds (Advisor Class) dated August 1, 1997
(filed as a part of Post-Effective Amendment No. 27 to the
Registration Statement on Form N1-A for American Century Target
Maturities Trust, File No. 2-94608, filed on August 29, 1997, and
incorporated herein by reference.
EX-99.B17 Power of Attorney dated January 15, 1998.
EX-99.B18 Multiple Class Plan of American Century California Tax-Free and
Municipal Funds, American Century Government Income Trust, American
Century International Bond Funds, American Century Investment Trust,
American Century Municipal Trust, American Century Target Maturities
Trust and American Century Quantitative Equity Funds dated August 1,
1997 (filed as a part of Post-Effective Amendment No. 27 to the
Registration Statement on Form N1-A for American Century Target
Maturities Trust, File No. 2-94608, filed on August 29, 1997, and
incorporated herein by reference).
EX-27.1.1 FDS - American Century Small Cap Quantitative Fund
AMERICAN CENTURY QUANTITATIVE EQUITY FUNDS
Bylaws
as amended March 9, 1998
Table of Contents
ARTICLE I Shareholders' Meeting..............................................1
Section 1. Place of Meetings...........................................1
Section 2. Meetings....................................................1
Section 3. Special Meetings............................................1
Section 4. Notice of Meetings..........................................1
Section 5. Consent to Shareholders' Meetings...........................2
Section 6. Shareholders Acting Without A Meeting.......................2
Section 7. Quorum......................................................2
Section 8. Voting Rights; Cumulative Voting............................2
Section 9. Proxies.....................................................3
Section 10. Organization...............................................3
Section 11. Inspectors of Election.....................................3
ARTICLE II Directors; Management.............................................3
Section 1. Powers......................................................3
Section 2. Number and Qualification....................................4
Section 3. Election and Tenure of Office...............................4
Section 4. Vacancies...................................................4
Section 5. Removal of Directors........................................5
Section 6. Place of Meetings and Meetings by Telephone.................5
Section 7. Organization Meetings.......................................5
Section 8. Other Regular Meetings......................................5
Section 9. Special Meetings - Notices..................................6
Section 10. Waiver of Notice...........................................6
Section 11. Directors Acting Without a Meeting by
Unanimous Written Consent.................................
Section 12. Notice of Adjournment......................................6
Section 13. Quorum.....................................................6
Section 14. Compensation of Directors..................................7
Section 15. Executive Committee........................................7
Section 16. Indemnification............................................7
ARTICLE III Officers.........................................................9
Section 1. Officers....................................................9
Section 2. Election....................................................9
Section 3. Subordinate Officers, Etc...................................9
Section 4. Removal and Resignation.....................................9
Section 5. Vacancies...................................................9
Section 6. Chairman of the Board.......................................9
Section 7. President..................................................10
Section 8. Vice-President.............................................10
Section 9. Secretary..................................................10
Section 10. Chief Financial Officer...................................10
Section 11. Representation of Shares of Other Entities................11
ARTICLE IV Corporate Records and Reports - Inspection.......................11
Section 1. Records....................................................11
Section 2. Inspection of Books and Records............................11
Section 3. Certification and Inspection of Bylaws.....................11
Section 4. Checks, Drafts, Etc........................................11
Section 5. Contracts, Etc. -- How Executed............................12
Section 6. Annual Report..............................................12
ARTICLE V Certificates and Transfer of Shares...............................12
Section 1. Certificates for Shares....................................12
Section 2. Transfer on the Books......................................12
Section 3. Lost or Destroyed Certificates.............................13
Section 4. Transfer Agent and Custodian...............................13
Section 5. Legend Condition...........................................13
ARTICLE VI Corporate Seal...................................................13
ARTICLE VII Amendments to Bylaws............................................13
Section 1. By Shareholders............................................13
Section 2. Powers of Directors........................................13
Section 3. Record of Amendments.......................................13
AMERICAN CENTURY QUANTITATIVE EQUITY FUNDS
Bylaws
as amended March 9, 1998
ARTICLE I
Shareholders' Meeting
Section 1. Place of Meetings.
All meetings of the shareholders shall be held at the offices of the
corporation, in the State of California, as may be designated for that purpose
from time to time by the Board of Directors, or at any other suitable place
designated by the Board of Directors.
Section 2. Meetings.
In accordance with Section 600 of the California Corporations Code, shareholder
meetings shall be held as required by the Investment Company Act of 1940 (15
U.S.C. Sec. 80a-1, et seq) or as the Board deems necessary.
Section 3. Special Meetings.
Special meetings of the shareholders for any purpose or purposes may be called
at any time by the president, a vice-president, the secretary, an assistant
secretary, or by the Board of Directors, or by one or more shareholders holding
not less than one-tenth (1/10) of the voting power of the corporation. Upon
request in writing by registered mail to the president, a vice-president, the
secretary or an assistant secretary, directed to such officers at the principal
office of the corporation, in California, or delivered to such officer in person
by any person entitled to call a meeting of shareholders, it shall be the duty
of such officer forthwith to cause notice to be given to the shareholders
entitled to vote of a meeting to be held at such time as such officer may fix
not less than ten nor more than sixty days after the receipt of such request. If
such notice shall not be given within seven days after the date of mailing or
date of delivery of such request, the person or persons calling the meeting may
fix the time of meeting and give notice thereof in the manner provided by these
Bylaws.
Section 4. Notice of Meetings.
Notices of meetings, annual or special, shall be given in writing to
shareholders entitled to vote by the secretary or the assistant secretary, or if
there be no such officer, or in the case of his neglect or refusal, by any
director or shareholder.
Such notices shall be sent to the shareholder's address appearing on the books
of the corporation, or supplied by him to the corporation for the purpose of
notice, but not less than seven days before such meeting.
Notice of any meeting of shareholders shall specify the place, the day and the
hour of meeting, and in case of special meeting, as provided by the California
Corporations Code, the general nature of the business to be transacted.
If a shareholder supplies no address, notice shall be deemed to have been given
to him if mailed to the place where the principal office of the company, in
California, is situated, or published at least once in some newspaper of general
circulation in the County of said principal office. Such notice shall specify
the place, the day and hour of the meeting, and in the case of special meetings,
the general nature of the business to be transacted.
If a meeting is adjourned for more than 45 days or if after the adjournment a
new record date is fixed for the adjourned meeting, a notice of the adjourned
meeting shall be given to each shareholder of record entitled to vote at the
meeting. Save, as aforesaid, it shall not be necessary to give any notice of the
adjournment or of the business to be transacted at an adjourned meeting other
than by announcement at the meeting at which such adjournment is taken.
Section 5. Consent to Shareholders' Meetings.
The transactions of any meeting of shareholders, however called and noticed,
shall be valid as though had a at meeting duly held after regular call and
notice, if a quorum be present either in person or by proxy, and if, either
before or after the meeting, each of the shareholders entitled to vote, not
present in person or by proxy, sign a written waiver of notice, or a consent to
the holding of such meeting, or an approval of the minutes thereof. All such
waivers, consents or approvals shall be filed with the corporate records or made
a part of the minutes of the meeting.
Section 6. Shareholders Acting Without A Meeting.
Unless otherwise provided in the Articles or in the California Corporations
Code, as amended from time to time, any action which may be taken at any annual
or special meeting of shareholders may be taken without a meeting and without
prior notice, if a consent in writing, setting forth the action so taken, shall
be signed by the holders of outstanding shares having not less than the minimum
number of votes that would be necessary to authorize or take such action at a
meeting at which all shares entitled to vote thereon were present and voted.
Section 7. Quorum.
The holders of a majority of the shares entitled to vote thereat, present in
person, or represented by proxy, shall be requisite and shall constitute a
quorum at all meetings of the shareholders for the transaction of business
except as otherwise provided by law, by the Articles of Incorporation, or by
these Bylaws. If, however, such majority shall not be present or represented at
any meeting of the shareholders, the shareholders entitled to vote thereat,
present in person, or by proxy, shall have the power to adjourn the meeting from
time to time, until the requisite amount of voting shares shall be present. At
such adjourned meeting at which the requisite amount of voting shares shall be
represented, any business may be transacted which might have been transacted at
the meeting as originally notified.
Section 8. Voting Rights; Cumulative Voting.
Every shareholder entitled to vote at any election of directors may cumulate his
votes and give one candidate a number of votes equal to the number of directors
to be elected multiplied by the number of votes to which the shareholder's
shares are normally entitled, or distribute his votes on the same principle
among as many candidates as the shareholder sees fit; provided, however, that no
shareholder shall be entitled to cumulate votes unless the candidate or
candidates' names have been placed in nomination prior to the voting and the
shareholder has given such notice, all shareholders may cumulate their votes for
candidates in nomination.
The candidates receiving the highest number of votes of the shares entitled to
be voted for them, up to the number of directors to be elected by such shares,
are elected.
The Board of Directors may determine the shareholders entitled to notice of any
meeting, or to vote, or entitled to receive any payment of any dividend or other
distribution or allotment of any rights, or entitled to exercise any rights in
respect of any lawful actions, by fixing, in advance, a record date, which shall
not be more than 60 nor less than 10 days prior to the date of such meeting nor
more than 60 days prior to any other action. A determination of shareholders of
record entitled to notice of or to vote at a meeting of shareholders shall apply
to any adjournment of a meeting unless the Board fixes a new record date for the
adjourned meeting; but the Board shall fix a new record date if the meeting is
adjourned for more than 45 days from the date set for the original meeting.
Shareholders at the close of business are entitled to notice and to vote or to
receive the dividend, distribution or allotment of rights or to exercise the
rights, as the case may be, notwithstanding any transfer of any shares on the
books of the corporation after the record date.
Section 9. Proxies.
Every person entitled to vote shares may authorize another person or persons to
act by proxy with respect to such shares by executing a written proxy in
accordance with the provisions of the California Corporations Code and filing
same with the Secretary of the Corporation.
Section 10. Organization.
The president, or in the absence of the president, any vice-president, shall
call the meeting of the shareholders to order, and shall act as chairman of the
meeting. In the absence of the president and all of the vice-presidents,
shareholders shall appoint a chairman for such meeting. The secretary of the
company shall act as secretary of all meetings of the shareholders, but in the
absence of the secretary at any meeting of the shareholders, the presiding
officer may appoint any person to act as secretary of the meeting.
Section 11. Inspectors of Election.
In advance of any meeting of shareholders the Board of Directors may, if they so
elect, appoint inspectors of election to act at such meeting or any adjournments
thereof. If inspectors of election be not so appointed, the chairman of any such
meeting may, and on the request of any shareholder or his proxy shall, make such
appointment at the meeting. The number of inspectors shall be either one or
three.
ARTICLE II
Directors; Management
Section 1. Powers.
Subject to the limitation of the Articles of Incorporation, of the Bylaws, and
of the laws of the State of California as to action to be authorized or approved
by the shareholders, all corporate powers shall be exercised by or under
authority of, and the business and affairs of this corporation shall be
controlled by, a Board of Directors.
Section 2. Number and Qualification.
The authorized number of directors of the corporation shall not be less than
seven (7) nor more than eleven (11). The exact number of directors shall be
fixed from time to time by a majority of the Board of Directors or by the
shareholders as provided in the California Corporations Code; provided, however,
that the authority of the Board to fix its number of directors shall in all
events be exercised in a manner consistent with the maintenance on the Board of
a majority of directors who are not "interested persons" in the corporation or
the corporation's investment advisor as defined by the Investment Company Act of
1940. The selection and nomination of disinterested directors is committed
solely to the discretion of a Nominating Committee consisting of all sitting
disinterested directors except where the remaining director or directors are
interested persons.
Section 3. Election and Tenure of Office.
The directors shall be elected by ballot at shareholder meetings called for that
purpose, to serve until their successors are elected and have qualified, except
that directors who are not "interested persons" as defined above or employees of
the Benham Capital Management Group of companies shall retire at the end of the
calendar year in which they shall have reached the age of seventy-five (75)
years. Their term of office shall begin immediately after election.
Section 4. Vacancies.
"Vacancy" when used with respect to the Board means any authorized position of
director which is not then filled by a duly elected, appointed or approved
director, whether caused by death, resignation, or removal, of any director, or
if the shareholders shall increase the authorized number of directors but shall
fail at the meeting at which such increase is authorized, or an adjournment
thereof, to elect the additional director so provided for, or in case the
shareholders fail at any time to elect the full number of authorized directors.
Vacancies in the Board of Directors may be filled by a majority of the remaining
directors, whether or not less than a quorum, or by a sole remaining director;
provided, however, that except as may be otherwise required by law, such
vacancies shall be filled so that a majority of the Board of Directors are
disinterested directors; and, further, that the selection and nomination of
disinterested directors hereunder is committed solely to the discretion of the
Nominating Committee (described in Section 2 of this Article), except where the
remaining director or directors are interested persons.
Vacancies occurring on the Board of Directors by reason of the removal of
directors (as provided in California Corporations Code Section 304) may be
filled only by approval of the shareholders.
Each director so appointed or approved shall hold office until he or his
successor is elected at an annual meeting of shareholders or a special called
for that purpose.
The shareholders may at any time elect a director to fill any vacancy not filled
by the directors, and may elect the additional directors at the meeting at which
an amendment of the Articles of Incorporation is voted authorizing an increase
in the number of directors.
A vacancy or vacancies shall be deemed to exist in case of death, resignation or
removal of any director, or if the shareholders shall increase the authorized
number of directors but shall fail at the meeting at which such increase is
authorized, or at an adjournment thereof, to elect the additional director so
provided for, or in case the shareholders fail at any time to elect the full
number of authorized directors.
If the Board of Directors accepts the resignation of a Director tendered to take
effect at a future time, the Board, or the shareholders, shall have power to
elect a successor to take office when the resignation shall become effective.
No reduction of the number of directors shall have the effect of removing any
director prior to the expiration of his term of office.
Section 5. Removal of Directors.
The entire Board of Directors or any individual director may be removed from
office as provided by Section 810 of the Corporations Code of the State of
California.
Section 6. Place of Meetings and Meetings by Telephone.
Meetings of the Board of Directors shall be held at the office of the
corporation in the State of California, as designated for that purpose, from
time to time, by resolution of the Board of Directors or written consent of all
of the members of the Board. Any meeting shall be valid, wherever held, if held
by the written consent of all members of the Board of Directors, given either
before or after the meeting and filed with the Secretary of the corporation. Any
meeting, regular or special, may be held by conference telephone or similar
communication equipment, so long as all directors participating in the meeting
can hear one another, and all such directors shall be deemed to be present in
person at the meeting; provided that, in accordance with the provisions of the
Investment Company Act of 1940, the Board may not transact by such a meeting any
business which involves the entering into, or the renewal, performance, or
approval of any contract or agreement, whereby a person undertakes regularly to
serve or act as the Fund's Investment Advisor or principal underwriter.
Section 7. Organization Meetings.
The organization meetings of the Board of Directors shall be held immediately
following the adjournment of the annual meetings of the shareholders.
Section 8. Other Regular Meetings.
Regular meetings of the Board of Directors shall be held at the corporate
offices, or such other place as may be designated by the Board of Directors, as
follows:
Time of Regular Meeting: 10:00 a.m.
Date of Regular Meeting: February 10, May 10, August 10, November 10
If said day shall fall upon a holiday, such meetings shall be held on the next
succeeding business day thereafter. No notice need be given of such regular
meetings.
Section 9. Special Meetings - Notices.
Special meetings of the Board of Directors for any purpose or purposes shall be
called at any time by the president or if he is absent or unable or refuses to
act, by any vice-president of by any two directors.
Written notice of the time and place of special meetings shall be delivered
personally to the directors or sent to each director by letter or by telegram,
charges prepaid, addressed to him at his address as it is shown upon the records
of the corporation, or if it is not so shown on such records or is not readily
ascertainable, at the place in which the meetings of the directors are regularly
held. In the case such notice is mailed or telegraphed, it shall be deposited in
the United States mail or delivered to the telegraph company, in the place in
which the principal office of the corporation is located at least forty-eight
(48) hours prior to the time of the holding of the meeting. In case such notice
is delivered as above provided, it shall be so delivered at least twenty-four
(24) hours prior to the time of the holding of the meeting. Such mailing,
telegraphing or delivery as above provided shall be due, legal and personal
notice to such director.
Section 10. Waiver of Notice.
When all of the directors are present at any directors' meeting, however called
or noticed, and sign a written consent thereto on the records of such meeting,
or, if a majority of the directors are present, and if those not present sign in
writing a waiver of notice of such meeting, whether prior to or after the
holding of such meeting, which said waiver shall be filed with the Secretary of
the corporation, the transactions thereof are as valid as if had at a meeting
regularly called and noticed.
Section 11. Directors Acting Without a Meeting by Unanimous Written Consent.
Any action required or permitted to be taken by the Board of Directors may be
taken without a meeting and with the same force and effect as if taken by a
unanimous vote of directors, if authorized by a writing signed by all members of
the board; provided that, in accordance with the Investment Company Act of 1940,
such written consent does not approve the entering into, or the renewal or
performance of any contract or agreement, whereby a person undertakes regularly
to serve or act as the Fund's Investment Advisor or principal underwriter. All
consents shall be filed with the regular minutes of the board.
Section 12. Notice of Adjournment.
Notice of the time and place of holding an adjourned meeting need not be given
to absent directors if the time and place be fixed at the meeting adjourned.
Section 13. Quorum.
A majority of the number of directors as fixed by the Articles of Incorporation
or Bylaws shall be necessary to constitute a quorum for the transaction of
business, and the action of a majority of the directors present at any meeting
at which there is a quorum, when duly assembled, is valid as a corporate act;
provided that a minority of the directors, in the absence of a quorum, may
adjourn from time to time, but may not transact any business. As to any business
which by law requires a vote of the non-affiliated, independent directors, such
business may not be transacted without such vote.
Section 14. Compensation of Directors.
Directors, as such, shall not receive any stated salary for their services, but
by resolution of the Board a fixed sum and expense of attendance, if any, may be
allowed for attendance at each regular and special meeting of the Board,
provided that nothing herein contained shall be construed to preclude any
director from serving the company in any other capacity and receiving
compensation therefor. Directors unaffiliated with the corporation's investment
advisor will be paid by the corporation. Directors affiliated with the
corporation's investment advisor shall be paid, if at all, by the Advisor.
Section 15. Executive Committee.
An executive committee may be appointed by resolution passed by a majority of
the whole Board. The executive committee shall be composed of members of the
Board, and shall have such powers as may be expressly delegated to it by
resolution of the Board of Directors. It shall act only in the intervals between
meetings of the Board and shall be subject at all times to the control of the
Board of Directors.
Section 16. Indemnification.
In the event that any present or past director or officer of the Fund is named
or threatened to be named as a defendant in any civil, criminal, administrative
or investigative action or proceeding arising out of his conduct as a director
or officer of the Fund (hereinafter "proceeding"), the Fund shall to the extent
permitted by this bylaw, Section 317 of the California Corporations Code and
Section 17 of the Investment Company Act of 1940 (the "Act") advance or
reimburse such officer or director for expenses, judgments, fines, settlements
and other amounts incurred in connection therewith.
A. The Fund shall in no event indemnify an officer or director for
expenses and other amounts incurred, except upon a determination by:
1. a court or other body before whom the proceeding was brought, or
2. in the absence of a determination by such court or other body,
by:
a) the vote of a majority of a quorum of directors who are
neither "interested persons" of the company as defined in
Section 2(a)(19) of the Act nor a party to the proceeding,
or
b) in independent legal counsel in a written opinion,
that such person is not liable by reason of willful misfeasance, bad
faith, gross negligence, or reckless disregard of duties as described
in Section 17(h) of the Act.
B. The Fund shall indemnify an officer or director for any expenses and
amounts actually and reasonably incurred in connection with any
proceeding or claim other than one by or in right of the Fund, if such
person has not prevailed on the merits, upon a determination by:
1. a majority of a quorum of directors who are not parties to such
proceeding, or
2. the court in which such proceeding is or was pending, or
3. approval of the shareholders as provided in Section 153 of the
California Corporations Code, with the shares owned by the person
to be indemnified not being entitled to vote,
that such person acted in good faith and in a manner such person
reasonably believed to be in the best interests of the Fund and, in the
case of a criminal proceeding, that such person had no reasonable cause
to believe his conduct was unlawful.
C. The Fund shall indemnify an officer or director for expenses actually
and reasonably incurred in connection with any proceeding by or in
right of the Fund, if such person has not prevailed on the merits, upon
a determination by:
1. a majority of a quorum of directors who are not parties to such
proceeding, or
2. the court in which such proceeding is or was pending,
3. approval of the shareholders as provided in Section 153 of the
California Corporations Code, with the shares owned by the person
to be indemnified not being entitled to vote,
that such person acted in good faith, in a manner such person believed
to be in the best interests of the Fund and with such care, including
reasonable inquiry, as an ordinarily prudent person in a like position
would use under similar circumstances; except that no indemnification
shall be made:
a. of amounts paid in settling or otherwise disposing of a
threatened or pending action, with or without court approval,
b. of expenses incurred in defending a threatened or pending action
which is settled or otherwise disposed of without court approval,
or
c. with respect to a claim for which such person shall have been
adjudged liable to the Fund, unless and to the extent that the
court in which such proceeding is or was pending shall determine
that, in view of all circumstances of the case, such person is
fairly and reasonably entitled to indemnity for the expenses
which such court shall determine.
To the extent an officer or director of the Fund has been successful on
the merits in defense of any proceeding, or in defense of any claim,
issue or matter therein, such person shall be indemnified against
expenses actually and reasonably incurred by such person in connection
therewith.
All amounts indemnified pursuant to this bylaw shall be indemnified only upon
final disposition of the proceeding in which they were incurred, except that
expenses incurred by an officer or director in defending any proceeding shall be
advanced prior to the final disposition of such proceeding upon receipt by the
Fund of an adequately secured undertaking by or on behalf of such person to
repay such amount advanced unless it be determined ultimately that such person
is entitled to indemnification pursuant to the provisions of this bylaw.
ARTICLE III
Officers
Section 1. Officers.
The officers of the Corporation shall be a President, a Secretary and a
Treasurer. The corporation may also have, at the discretion of the Board of
Directors, one or more Vice Presidents, one or more Assistant Secretaries, one
or more Assistant Treasurers, and such other officers as may be appointed in
accordance with the provisions of Section 3 of this Article III. Any number of
offices may be held by the same person.
Section 2. Election.
The officers of the corporation, except such officers as may be appointed in
accordance with the provisions of Section 3 or Section 5 of this Article shall
be chosen by the Board of Directors, and each shall hold his office until he
shall resign or shall be removed or otherwise disqualified to serve, or his
successor shall be elected and qualified.
Section 3. Subordinate Officers, Etc.
The Board of Directors may appoint such other officers as the business of the
corporation may require, each of whom shall hold office for such period, have
such authority and perform such duties as are provided in the Bylaws or as the
Board of Directors may from time to time determine.
Section 4. Removal and Resignation.
Any officer may be removed, either with or without cause, by a majority of the
directors at the time in office, at any regular or special meeting of the Board,
or, except in case of an officer chosen by the Board of Directors, by any
officer upon whom such power of removal may be conferred by the Board of
Directors.
Any officer may resign at any time by giving written notice to the Board of
Directors, or to the president, or to the secretary of the corporation. Any such
resignation shall take effect at the date of the receipt of such notice or at
any later time specified therein; and, unless otherwise specified therein, the
acceptance of such resignation shall not be necessary to make it effective.
Section 5. Vacancies.
A vacancy in any office because of death, resignation, removal, disqualification
or any other cause shall be filled in the manner prescribed in the bylaws for
regular appointments to such office.
Section 6. Chairman of the Board.
The Directors may designate a Director to serve as the Chairman of the Board,
who shall not be considered an officer of the Corporation. The Chairman of the
Board shall, if present, preside at meetings of the Board of Directors and
exercise and perform such other powers and duties as may be from time to time
assigned to him by the Board of Directors or prescribed by the Bylaws.
Section 7. President.
Subject to such supervisory powers, if any, as may be given by the Board of
Directors to the Chairman of the Board, the President shall be the principal
executive officer and the principal operating officer of the Corporation and
shall, subject to control of the Board of Directors, have general supervision,
direction and control of the business and the officers of the Corporation. He
shall preside at all shareholder meetings and, in the absence of the Chairman of
the Board or if there be none, at all meetings of the Board of Directors. He
shall have the general powers and duties of management usually vested in the
office of President of a corporation and shall have such other powers and duties
as may be prescribed by the Board of Directors or these Bylaws.
Section 8. Vice-President.
In the absence or disability of the president, the vice-presidents, in order of
their rank as fixed by the Board of Directors, or if not ranked, the
vice-president designated by the Board of Directors, shall perform all the
duties of the president, and when so acting shall have all the powers of, and be
subject to, all the restrictions upon, the president. The vice-president shall
have such other powers and perform such other duties as from time to time may be
prescribed for them respectively by the Board of Directors or the Bylaws.
Section 9. Secretary.
The secretary shall keep, or cause to be kept, a book of minutes at the
principal office or such other place as the Board of Directors may order, of all
meetings of Directors and Shareholders, with the time and place of holding,
whether regular or special, and if special, how authorized, the notice thereof
given, the names of those present at directors' meetings, the number of shares
present or represented at shareholders' meetings and the proceedings thereof.
The secretary shall keep, or cause to be kept, at the principal office or at the
office of the corporation's transfer agent, a share register, or duplicate share
register, showing the names of the shareholders and their addresses; the number
and classes of shares held by each; the number and date of certificates issued
(if any) for the same; and the number and date of cancellation of every
certificate surrendered for cancellation.
The secretary shall give, or cause to be given, notice of all meetings of the
shareholders and of the Board of Directors required by the bylaws or by law to
be given, and he shall keep the seal of the corporation in safe custody, and
shall have such other powers and perform such other duties as may be prescribed
by the Board of Directors or by the bylaws.
Section 10. Chief Financial Officer.
The chief financial officer shall keep and maintain, or cause to be kept and
maintained, adequate and correct accounts of the properties and business
transactions of the corporation, including accounts of its assets, liabilities,
receipts, disbursements, gains, losses, capital, surplus and shares. Any
surplus, including earned surplus, paid-in surplus and surplus arising from a
reduction of stated capital, shall be classified according to source and shown
in a separate account. The books of account shall at all reasonable times be
open to inspection by any director.
The chief financial officer shall deposit or cause to be deposited all moneys
and other valuables in the name and to the credit of the corporation with the
corporation's custodian bank. He shall cause disbursement of funds of the
corporation as may be ordered by the Board of Directors, shall render to the
president and directors, whenever they request it, an account of all of his
transactions as chief financial officer and of the financial condition of the
corporation, and shall have such other powers and perform such other duties as
may be prescribed by the Board of Directors or the bylaws.
Section 11. Representation of Shares of Other Entities.
The chairman of the board, the president or any vice president or any other
person authorized by resolution of the Board of Directors or by any of the
foregoing designated officers, is authorized to vote on behalf of the Funds any
and all shares of any corporation or corporations, partnerships, trusts, or
other entities, foreign or domestic, standing in the name of the Funds. The
authority granted to these officers to vote or represent on behalf of the Funds
any and all shares held by the Funds in any form or entity may be exercised by
any of these officers in person or by any person authorized to do so, including
duly authorized advisors and/or subadvisors of the Funds, by a proxy duly
executed by these officers.
ARTICLE IV
Corporate Records and Reports - Inspection
Section 1. Records.
The corporation shall maintain adequate and correct accounts, books and records
of its business and properties. All of such books, records and accounts shall be
kept at its principle place of business in the State of California, or at the
office of its transfer agent, custodian or accountant, as determined by the
president and secretary from time to time.
Section 2. Inspection of Books and Records.
All books and records provided for in Section 3003 of the Corporations Code of
California shall be open to inspection of the directors and shareholders from
time to time and in the manner provided in said Section 3003.
Section 3. Certification and Inspection of Bylaws.
The original or a copy of these Bylaws, as amended or otherwise altered to date,
certified by the Secretary, shall be open to inspection by the shareholders of
the company, as provided in Section 502 of the California Corporations Code.
Section 4. Checks, Drafts, Etc.
All checks, drafts or other orders for payment of money, notes or other
evidences of indebtedness, issued in the name of or payable to the corporation,
shall be signed or endorsed by such person or persons and in such manner as
shall be determined from time to time by resolution of the Board of Directors.
Section 5. Contracts, Etc. -- How Executed.
The Board of Directors, except as in the Bylaws otherwise provided, may
authorize any officer or officers, agent or agents, to enter into any contract
or execute any instrument in the name of and on behalf of the corporation. Such
authority may be general or confined to specific instances. Unless so authorized
by the Board of Directors, no officer, agent or employee shall have any power or
authority to bind the corporation by any contract or engagement, or to pledge
its credit, or to render it liable for any purpose or to any amount.
Section 6. Annual Report.
The Board of Directors shall cause an annual report or statement to be sent to
the shareholders of this corporation not later than 120 days after the close of
the fiscal or calendar year in accordance with the provisions of Sections 3006 -
3010 of the Corporations Code of the State of California, and shall distribute
financial reports to the shareholders as of the last days of March, June,
September and December of each year.
ARTICLE V
Certificates and Transfer of Shares
Section 1. Certificates for Shares.
Certificates for shares shall be of such form and device as the Board of
Directors may designate and shall state the name of the record holder of the
shares represented thereby; its number; date of issuance; the number of shares
for which it is issued; the par value, if any, or a statement that such shares
are without par value; a statement of rights, privileges, preferences and
restrictions, if any; a statement as to the redemption or conversion, if any; a
statement of liens or restrictions upon transfer or voting, if any; if the
shares be assessable or, if assessments are collectible by personal action, a
plain statement of such facts.
Every certificate for shares must be signed by the Chairman, president or any
vice president and by the Chief Financial Officer, the secretary, Controller,
any Assistant Controller or any assistant secretary or must be authenticated by
facsimiles of the signatures of the president and secretary or by a facsimile of
the signature of its president and the written signature of its secretary or an
assistant secretary. Before it becomes effective every certificate for shares
authenticated by a facsimile of a signature must be countersigned by a transfer
agent or transfer clerk and must be registered by an incorporated bank or trust
company, either domestic or foreign, as registrar of transfers.
Notwithstanding any of the foregoing, the Board of Directors may authorize the
issuance without certificate of any class or series of shares of the Corporation
in accordance with California law.
Section 2. Transfer on the Books.
Upon surrender to the secretary or transfer agent of the corporation of a
certificate for shares duly endorsed or accompanied by proper evidence of
succession, assignment or authority to transfer, it shall be the duty of the
corporation to issue a new certificate to the person entitled thereto; cancel
the old certificate and record the transaction upon its books.
Section 3. Lost or Destroyed Certificates.
Any person claiming a certificate of stock to be lost or destroyed shall make an
affidavit or affirmation of that fact and advertise the same in such manner as
the Board of Directors may require, and shall if the directors so require give
the corporation a bond of indemnity, in the form and with one or more sureties
satisfactory to the Board, in at least double the value of the stock represented
by said certificate, whereupon a new certificate may be issued in the same tenor
and for the same number of shares as the one alleged to be lost or destroyed.
Section 4. Transfer Agent and Custodian.
The Board of Directors may authorize the president to contract for the services
of a transfer agent and custodian for the corporation.
Section 5. Legend Condition.
In the event any shares of this corporation are issued pursuant to a permit or
exemption therefrom requiring the imposition of a legend condition the person or
persons issuing or transferring said shares shall make sure said legend appears
on the certificate and on the stub relating thereto in the stock record book and
shall not be required to transfer any shares free of such legend unless an
amendment to such permit or a new permit be first issued so authorizing such a
deletion.
ARTICLE VI
Corporate Seal
The corporate seal shall be circular in form, and shall have inscribed thereon
the name of the corporation, the date of its incorporation, and the word
California.
ARTICLE VII
Amendments to Bylaws
Section 1. By Shareholders.
New Bylaws may be adopted or these bylaws may be repealed or amended at their
annual meeting, or at any other meeting of the shareholders called for that
purpose, by a vote of shareholders entitled to exercise a majority of the voting
power of the corporation, or by written assent of such shareholders.
Section 2. Powers of Directors.
Subject to the right of the shareholders to adopt, amend or repeal bylaws, as
provided in Section 1 of this Article VII, the Board of Directors may adopt,
amend or repeal any of these bylaws other than a bylaw or amendment thereof
changing the authorized number of directors.
Section 3. Record of Amendments.
Whenever an amendment or new bylaw is adopted, it shall be copied in the book of
bylaws with the original bylaws, in the appropriate place. If any Bylaw is
repealed, the fact of repeal with the date of the meeting at which the repeal
was enacted or written assent was filed shall be stated in said book.
Janet A. Nash
Attorney at Law
4500 Main Street * P.O. Box 418210
Kansas City, Missouri 64141-9210
April 15, 1998
American Century Quantitative Equity Funds
American Century Tower
4500 Main Street
Kansas City, Missouri 64111
Ladies and Gentlemen:
As counsel to American Century Quantitative Equity Funds (the
"Corporation"), I am generally familiar with its affairs. Based upon this
familiarity, and upon the examination of such documents as I deemed relevant, it
is my opinion that the shares of the Corporation described in the 1933 Act
Post-Effective Amendment No. 21 and 1940 Act Amendment No. 23 to its
Registration Statement on Form N-1A, to be filed with the Securities and
Exchange Commission on April 15, 1998, will, when issued, be validly issued,
fully paid and nonassessable.
For the record, it should be stated that I am an employee of American
Century Services Corporation, an affiliated corporation of American Century
Investment Management, Inc., the investment advisor of the Corporation.
I hereby consent to the use of this opinion as an exhibit to the
above-referenced Post-Effective Amendment.
Very truly yours,
/s/Janet A. Nash
Janet A. Nash
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned, AMERICAN CENTURY
QUANTITATIVE EQUITY FUNDS, hereinafter called the "Corporation" and certain
directors and officers of the Corporation, do hereby constitute and appoint
James E. Stowers, III, William M. Lyons, Douglas A. Paul, and Patrick A. Looby,
and each of them individually, their true and lawful attorneys and agents to
take any and all action and execute any and all instruments which said attorneys
and agents may deem necessary or advisable to enable the Corporation to comply
with the Securities Act of 1933 and/or the Investment Company Act of 1940, as
amended, and any rules regulations, orders, or other requirements of the United
States Securities and Exchange Commission thereunder, in connection with the
registration under the Securities Act of 1933 and/or the Investment Company Act
of 1940, as amended, including specifically, but without limitation of the
foregoing, power and authority to sign the name of the Corporation in its behalf
and to affix its corporate seal, and to sign the names of each of such directors
and officers in their capacities as indicated, to any amendment or supplement to
the Registration Statement filed with the Securities and Exchange Commission
under the Securities Act of 1933 and/or the Investment Company Act of 1940, as
amended, and to any instruments or documents filed or to be filed as a part of
or in connection with such Registration Statement; the Registration Statement on
Form N-14 and any amendments or supplements thereto to be filed with the
Securities and Exchange Commission under the Securities Act of 1933 and/or the
Investment Company Act of 1940, as amended, and to any instruments or documents
filed or to be filed as part of or in connection with such Registration
Statement; and each of the undersigned hereby ratifies and confirms all that
said attorneys and agents shall do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the Corporation has caused this Power to be executed by
its duly authorized officers on this the 15th day of January, 1998.
AMERICAN CENTURY QUANTITATIVE EQUITY FUNDS
(A California Corporation)
By: /s/ Richard W. Ingram
Richard W. Ingram, President
SIGNATURE AND TITLE
/s/ James E. Stowers III /s/ Isaac Stein
James E. Stowers, III Isaac Stein
Chairman Director
/s/ Albert A. Eisenstat /s/ Jeanne D. Wohlers
Albert A. Eisenstat Jeanne D. Wohlers
Director Director
/s/ Ronald J. Gilson /s/ William M. Lyons
Ronald J. Gilson William M. Lyons
Director Director
/s/ Myron S. Scholes /s/ Maryanne Roepke
Myron S. Scholes Maryanne Roepke
Director Treasurer
/s/ Kenneth E. Scott Attest:
Kenneth E. Scott
Director By: /s/ Douglas A. Paul
Douglas A. Paul, Secretary
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED
FROM THE ANNUAL REPORT OF AMERICAN CENTURY MUTUAL FUNDS, INC.
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH REPORT.
</LEGEND>
<CIK> 0000827060
<NAME> AMERICAN CENTURY QUANTITATIVE EQUITY FUNDS
<SERIES>
<NUMBER> 6
<NAME> AMERICAN CENTURY SMALL CAP QUANTITATIVE
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